UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C., 20549
                                   FORM 10-KSB

           ANNUAL REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE
                             SECURITIES ACT OF 1934

                     For the fiscal year ended May 31, 2002

                           Commission File No. 0-5141

                         PRINCETON AMERICAN CORPORATION
                 (Name of small business issuer in its charter)

               Nevada                                 22-1848644
   (state or other jurisdiction of      (I.R.S. Employer Identification Number)
   incorporation or organization)

             2222 East Camelback Road, Suite 105 Phoenix, AZ 85016
               (Address of principal office)            (Zip code)

Issuer's telephone number, including area code: (602) 522-2444

Securities registered pursuant to Section 12(b) of the Act:  None

Securities  registered pursuant to Section 12(g) of the Act: Common Stock, $.001
par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods 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  [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

Issuer's revenues for its most recent fiscal year were $1,017,304

The aggregate market value of voting stock held by non-affiliates of the
registrant is not determinable as of August 28, 2002 as the trading of the
Company's shares was halted on October 9, 2000 at the request of the registrant.

The number of shares outstanding of the issuer's common stock, as of the latest
practicable date of August 28, 2002 was 10,923,918.



<PAGE>



Princeton American Corporation
FORM 10-KSB
<TABLE>
<CAPTION>
                     FOR THE FISCAL YEAR ENDED MAY 31, 2002

                                TABLE OF CONTENTS


<S>                                                                                               <C>
         PART I.............................................................................       3
               Item 1 - Description of Business.............................................       3
               Item 2 - Description of Property.............................................       3
               Item 3 - Legal Proceedings...................................................       6
               Item 4 - Submission of Matters to a Vote of Security Holders.................       7
         PART II............................................................................       8
               Item 5 - Market for Common Equity and Related Shareholder Matters............       8
               Item 6 - Management's Discussion and Analysis or Plan of Operation...........       8
               Item 7 - Financial Statements and Supplementary Data.........................       9
               Item 8 - Changes in and Disagreements with Accountants on Accounting
                            Financial Disclosure............................................       9
         PART III...........................................................................      10
               Item 9 - Directors and Executive Officers, Promoters and
                            Control Persons; Compliance with Section 16(a) of the Exchange Act    10
               Item 10 - Executive Compensation.............................................      11
               Item 11 - Security Ownership of Certain Beneficial Owners and Management.....      11
               Item 12 - Certain Relationships and Related Transactions.....................      12
               Item 13 - Exhibits and Reports on Form 8-K...................................      12
         SIGNATURES.........................................................................      12
         FINANCIAL STATEMENTS...............................................................     F-1
</TABLE>

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this report discuss future expectations,
contain projections of results of operations or financial condition or state
other "forward-looking" information. Those statements are subject to known and
unknown risks, uncertainties and other factors that could cause the actual
results to differ materially from those contemplated by the statements. The
forward-looking information is based on various factors and was derived using
numerous assumptions. Important factors that may cause actual results to differ
from forward-looking statements and projections include, for example:

-    a downturn in the Phoenix,  Arizona real estate  market,  particularly  one
     which would adversely affect commercial lease rates;
-    an adverse result in litigation referred to in this report;
-    any change in tax laws which would change the Company's  ability to utilize
     its tax loss carry-forward or the inability under existing tax laws for the
     full utilization of such tax loss carry-forward;
-    an  inability  of the  Company to regain  listed or  trading  status on the
     Over-the-Counter  Bulletin Board,  NASDAQ, the American Stock Exchange,  or
     some other recognized market or exchange;
-    certain  operations  of the Company,  including  the formation of alliances
     with other entities, will indefinitely remain under the jurisdiction of and
     be subject to the confirmation and approval of the U.S.  Bankruptcy  Court.
     Disagreements  between  the  Bankruptcy  Court  and the  Company  regarding
     business decisions could adversely affect the Company;
-    the  inability  of the Company to secure  renewals  of  existing  leases at
     commercially  reasonable rates or to promptly replace tenants following the
     expiration of existing leases;
-    the effect of changing economic conditions; and
-    other  risks  which  may  be  described  in our  future  filings  with  the
     Securities and Exchange Commission.  The Company does not promise to update
     forward-looking  information  to  reflect  actual  results  or  changes  in
     assumptions or other factors that could affect those statements.

                                       2
<PAGE>

PART I

ITEM 1.  DESCRIPTION OF BUSINESS

CURRENT COMPANY BUSINESS.

As of May 31, 2002, Princeton's primary business activity is the management of
its assets including two office buildings totaling 50,000 square feet in
Phoenix, Arizona. The Company has 2 employees. None of the Company's employees
is represented by a labor union and we believe that employee relations are good.

BANKRUPTCY FILING; APPOINTMENT OF A TRUSTEE.

On December 11, 1996 the Company filed for protection under Chapter 11 of the
U.S. Bankruptcy code. (Case number 96-13675 PHX JMM) On January 21, 1977, the
then existing management of Princeton submitted a Plan of Reorganization. The
Plan was challenged by William C. Taylor, a former principal and creditor of the
Company, who petitioned the Court for the appointment of a trustee.

The case was tried and on February 4, 1997, the Court issued its order
appointing Roger W. Brown as Trustee. Shortly thereafter, the Trustee terminated
the then existing management of Princeton and assumed day-to-day management of
the Company.

CONFIRMATION OF JOINT PLAN OF REORGANIZATION.

After Roger W. Brown was appointed Trustee in February 1997, William C. Taylor
submitted his proposed Plan of Reorganization of Princeton on May 30, 1997.
During the course of extensive litigation among competing plan proponents, other
concerned parties and creditors, on August 28, 1997, Trustee Brown and Mr.
Taylor filed a joint Plan of Reorganization. Their Joint Plan was confirmed by
the Court on November 19, 1997 and was published in its entirety in a current
Report on Form 8K which was filed with the Securities and Exchange Commission
(the "Commission") on December 20, 1997, the Effective Date of the Plan.

ITEM 2.  DESCRIPTION OF  PROPERTY

2222 EAST CAMELBACK ROAD, PHOENIX, ARIZONA.

On March 12, 1992 Princeton acquired this two story building which contains
approximately 30,778 rentable square feet of office space. The property includes
a banking facility with a drive-in teller's window and a vault on the ground
floor. The Company paid approximately $296,000 cash for the building including
closing costs and commissions.

Princeton occupies 1497 square feet (4.86%) of the total leasable space in this
building. As of May 31, 2002, the balance of the remaining leasable space was
occupied by unaffiliated tenants, producing approximately $700,000 of income
annually. The Realty Taxes for 2222 are approximately $65,400. Additional
information about this property is included in the Property Information and
Operating Data Table at the end of this Item 2.

4808 NORTH 22ND STREET, PHOENIX, ARIZONA.

On December 1, 1994, Princeton acquired this 19,226 rentable sq. ft. two story
office building. The Company paid $1,000,000 for the building, of which $900,000
was borrowed from the seller at 8% annual interest. As of May 31, 2002 the
building is 100% leased and produces approximately $407,000 of income annually.
The Realty Taxes are approximately $40,057. Additional information about this
property is included in the Property Information and Operating Data Table at the
end of this Item 2.

MESA TRAILER PARK COMMISSION RECEIVABLE.

In March, 1994 Princeton acquired a real estate brokerage commission that
provides for payments equal to 5% of the total lease payments generated from a
55 year ground lease of a 55-acre mobile home park in Mesa, Arizona. The Company
purchased the commission for $60,000 cash and 174,400 shares of restricted
Princeton common stock. The lease runs from 1980 to 2031. The commission


                                       3
<PAGE>

agreement presently provides quarterly payments of $3,937.50 which are made
through an escrow at Security Title Company. The quarterly payments escalate
annually to $7,437 per quarter at year 2030. Through May 31, 2002 approximately
$332,500 had been paid and $783,218.45 of additional commission will be paid to
Princeton through year 2031 pursuant to the agreement. While there can be no
assurance that Princeton will receive any or all of these assigned brokerage
fees in the future, as of the date of this report all payments have been
received on time.

PROPERTY INFORMATION AND OPERATING DATA

2222 East Camelback Road
Phoenix, Arizona

1.   Character and Location.  Two story office building;  30,778 rentable square
     feet;  includes a banking facility with a drive-in teller window and a bank
     vault.

2.   Title to Property. Building is subject to a First Deed of Trust:

                           Principal:                   $2,819,976
                           Interest rate:               8.25%
                           Payment:                     $22,503.68
                           Maturity:                    April 2007

(On April 15, 2002, Southwest Bank of Phoenix, one of the prime tenants in the
building, made two loans to the Company aggregating $4,500,000. The loans are
secured by first deeds of trust on both of the Company's office buildings, in
the amount of $2,825,000 for the 2222 East Camelback Road building and
$1,675,000 for the 4808 North 22nd Street facility.)

3.   Lease Terms.  The Building is subject to two 99 year net ground leases that
     expire in 2073 and 2076.  Rent  adjusts  each 10 years based upon 8% of the
     fair market value of the ground,  excluding  improvements.  The first lease
     has a monthly  base  payment of $4,933,  and will next adjust in 2009.  The
     second  lease has a monthly  payment of $3,100 and will next adjust  during
     the 2003 fiscal year.

4.   Renovation or Improvement  Plans.  In March,  2001,  the Company  commenced
     remodeling of the common areas of the building including a renovated lobby,
     hallways  and four  bathrooms.  These  improvements  were paid for from the
     proceeds of a loan obtained from Southwest Bank which was paid in full from
     the refinance proceeds of the first deed of trust mentioned above.

5.   Competitive  Conditions.  This  property is located in an area known as the
     "Camelback  Corridor"  which is comprised  predominately  of Class A office
     buildings.  This  area is  considered  one of the most  prestigious  in the
     metropolitan  Phoenix.  This  building  competes with both higher and lower
     priced  office  space in the  immediate  vicinity.  The  current  market is
     strong, with high renewals.

6.   Insurance.  Management  believes that the property is adequately covered by
     insurance.

7.   General Information.

    (i)  Occupancy Rate - 100% - as of May 31, 2002.

    (ii) Tenants - Rent Roll As of May 31, 2002.


                                       4
<PAGE>
<TABLE>
<CAPTION>
                                                                EFFECTIVE    CURRENT
                               RENTABLE    TENANT   MONTHS TO   RATE/YR/      BASE
              TENANT          SQUARE FEET   SHARE  EXPIRATION  SQUARE FEET  PER MONTH
       -------------------   --------------------------------------------------------
<S>                             <C>        <C>
       Princeton American       1,497      4.86%       N/A          N/A         N/A
       Corp.
       Eubanks Consulting         325      1.06%       N/A       $24.00    $    650

       Southwest Bank           8,057     26.17%        40       $22.95    $ 15,410(1)

       GBLS Commercial
       Real Estate
       Services                 3,301     10.73%         6 (2)   $24.00    $  6,602
       United Title Agency      9,541     31.00%        44       $22.92    $ 18,220
       Nationwide Vision        5,084     16.52%        46       $22.50    $  9,533
       International
       Circuit Sales            2,973      9.66%         1       $21.00    $  5,203
</TABLE>

(1)  Lessee has two (2) five-year options to renew

(2)  Lessee has extended lease to December 1, 2002 with right to terminate
     after May 1, 2002.

   (iii) Tenants principal business, occupations and professions  -

         Princeton American Corporation - owner and manager of building.
         Southwest Bank - banking. GBLS Commercial Real Estate Services - real
         estate brokers. United Title Agency/ First Financial Title Agency -
         title insurance and escrow services. Nationwide Vision Centers -
         outpatient laser eye surgery. International Circuit Sales - computer
         component sales- .Eubanks Consulting, Land Planners, Construction and
         Development Managers

    (iv) Average rental per square foot for the year ending 5/31/02, $21.81
         (not including parking and miscellaneous income)

     (v) Lease Expirations: All leases will expire no later than five
         years from the date of this filing unless renewed or extended by
         the lessee.

    (vi) Depreciation Components: The Company depreciates the buildings
         primarily over lives of 39 years, using the Modified Accelerated Cost
         Recovery Method for federal income tax purposes.

PROPERTY INFORMATION AND OPERATING DATA

4808 North 22nd Street
Phoenix, Arizona

1.   Character and Location. Two story office building; 19,226 square feet;
     located at 4808 North 22nd Street, Phoenix, Arizona.

2.   Title to Property. Building is subject to a first deed of trust:


       Principal:                     $1,671,991
       Interest rate:                 8.0%
       Payment:                       $13,058.97
       Maturity:                      April 2004

3.   Lease Terms. Subject to a ground lease which expires July 31, 2031. The
     current rent rate is $2,461.93 per month, subject to annual adjustment
     based on the Consumer Price Index.

4.   Renovation or Improvement Plans. On December 5, 2000, the Company leased
     the second floor (comprised of 10,075 square feet) to Alliance Investors,
     LLC. for a period of five years. As a condition of this lease, the Tenant


                                       5
<PAGE>

     completely renovated this space at a cost in excess of $200,000 of which
     approximately $100,000 was contributed by the Company. During the months of
     January and February, 2002, the Company leased Suite 150 previously
     occupied by Shaeffer-Smith-Ankeney Insurance Agency to WRG Design, LLC. for
     a new three year term. The cost of tenant improvements to the new WRG
     spaces of approximately $26,500 was paid by the Company. Alliance
     Investors, LLC (the tenant in Suite 200) expanded its occupancy of the
     entire second floor of this building to include the former WRG spaces and
     has made extensive improvements to that suite at its own expense. This
     office building is now fully leased.

5.   Competitive Conditions.

    This property is located in an area known as the "Camelback Corridor," which
    is comprised predominantly of office buildings. This building competes with
    both higher and lower priced office space in the immediate vicinity. Current
    market conditions are strong, with high renewals.

6.   Insurance. Management believes that the property is adequately covered by
     insurance.

7.   General Information.

     (i)  Occupancy Rate: 100% - effective as of May 31, 2002.

     (ii) Tenants - Rent Roll as of May 31, 2002.

                                                            EFFECTIVE
                                                             RATE/YR/
                             RENTABLE    TENANT   MONTHS TO   SQUARE    CURRENT
          TENANT            SQUARE FEET   SHARE  EXPIRATION    FEET      BASE
  ----------------------   ------------------------------------------  --------
  Alliance Investors, LLC     10,075      52,40%     43       $20.25    $17,002


  Alliance Investors, LLC      3,302      17.17      20       $20.25    $ 5,572

  WRG Design                   5,849      30.43%     33       $21.75    $10,601

     (iii) Principal business, occupations and professions -

          Alliance Investors, LLC - residential real estate. WRG Design - Civil
          Engineers, Landscape Architecture

     (iv) Average effective rental per square foot for year ending 5/31/02 -
          $20.71 (not including parking and miscellaneous income)


     (v)  Lease Expirations: All leases will expire no later than five years
          from the date of this filing unless renewed or extended by lessee.

     (vi) Depreciation Components: The Company depreciates the buildings
          primarily over lives of 39 years, using the Modified Accelerated Cost
          Recovery Method for federal income tax purposes.

ITEM 3.  LEGAL PROCEEDINGS

CHAPTER 11 BANKRUPTCY LITIGATION.

ADMINISTRATIVE CLAIMS.

Administrative claims for professional and other services have been paid by the
Company.

UNSECURED CREDITOR CLAIMS.

During the initial stage of the bankruptcy proceedings, creditors filed 65
proofs of claim aggregating $5,001,503. These proofs of claim had been litigated
or settled, reducing the number of claims to 50 and the amount to $1,468,564,
including principal and interest, at the end of fiscal year 2001. As of May 31,
2002, only 34 General Creditor's claims remain unpaid and are the subject of
pending litigation or other disposition by the Bankruptcy Court.


                                       6

<PAGE>

SHAREHOLDER CLAIMS.

As reported in the May 31, 2000 10KSB, equity shareholders filed approximately
900 proof of interest claims, allegedly representing 14,840,000 shares. These
claims were reviewed by management and litigated or settled by agreements which
were confirmed by Court orders reducing such outstanding shares to approximately
8,488,828 shares. During the current reporting year, the outstanding shares were
further reduced to 6,554,351 by taking into consideration the 10 to 1 reverse
split which occurred in December 1995 and which had not been calculated with
respect to some of the shareholder's interests.

Unresolved Claims. All proof of interest claims have been resolved by the Court
with the exception of the following matters:

Onset Investment Limited. Onset filed a claim for damages in the amount of
    $200,713 based on an alleged breach of a stock purchase agreement by
    Princeton. The Company has objected to this claim and the matter is awaiting
    determination by the Court. Settlement negotiations are pending, and
    Princeton anticipates its maximum exposure to be approximately $25,000 cash
    and 70,000 shares of common stock. If the Onset claim is allowed in whole or
    in part, the Company intends to seek a ruling by the Bankruptcy Court
    subordinating the Onset claim from that of a creditor to that of an equity
    holder.

There are 26 claims which remain on the company's books that management believes
     are invalid. These claims will remain on the books until a formal
     determination has been made as to their invalidity. The aggregate value of
     these disputed claims is $133,433 including interest and principal.

RESOLVED CLAIMS.

A proof of claim had been filed with the bankruptcy court by Harry and Irene
Weiss in the amount of $812,707 which was objected to by the company and
resulted in several lawsuits. (See note 8 to the financial statements) This
issue was settled on February 9, 2001. The company agreed to pay the Weiss's
$560,000 in cash plus 10% interest until paid. During the year ended 5-31-02 the
settlement amount of $560,000 plus accrued interest in the amount of $76,823 was
paid in full settlement of this claim.

CURRENT LITIGATION:

    Testasecca, et al v. Princeton American Corporation and William C. Taylor.
    On May 22, 2001 Lawrence Testasecca and others filed a complaint in an
    adversary pleading in the Bankruptcy Court. Among other things, the
    Plaintiffs alleged that they should be recognized as owners of an
    unspecified number of shares that they purchased after the Bankruptcy Court
    proceedings began without establishing that these shares were the subject of
    allowed interests under the Plan of Reorganization. The Plaintiffs
    petitioned the Court to vacate its September 15, 2001 order which canceled
    all outstanding Princeton American share certificates and authorized the
    issuance of new certificates reflecting the allowed interests of
    shareholders under the Plan of Reorganization. At least three of the
    Plaintiffs (Larry Testasecca, Charles Crehore and Eugene Targosz) received
    actual notice of the bankruptcy, had filed Proofs of Interest pursuant to
    the July 1997 order of the Court establishing a deadline for filing Proofs
    of Interest and had voted in favor of the Plan. The remaining Plaintiffs are
    relatives of Mr. Targosz and Mr. Testasseca.

    On November 8, 2001, the Court issued a Memorandum Decision and Order
    denying Plaintiffs petition. Plaintiffs appealed this decision to the U.S.
    District Court for the District of Arizona. On July 8, 2002, the District
    Court dismissed the appeal because of the failure of the plaintiffs to
    pursue it. The remaining segment of the lawsuit is the subject of a Motion
    for Summary Judgment filed by the Company and William C. Taylor seeking its
    dismissal.


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

    No matters have been submitted to a vote of security holders since the
    annual meeting on September 14, 1995, when shareholders voted to (i) change
    the name of the Company from Princeton Electronic Products, Inc. to
    Princeton American Corporation, and (ii) to change the domicile of the
    Company from New Jersey to the State of Nevada.

    Management expects to call for a shareholder's meeting at 10:00 AM on
    October 30, 2002 at a location to be announced.



                                       7
<PAGE>

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS

Princeton's Common Stock had traded on the over-the-counter market "pink sheets"
since the Company was delisted from the NASDAQ (Small Capital) Market in
November 1996, until the following events took place:

On September 15, 2000, the Bankruptcy Court ordered Princeton American and its
transfer agent to cancel all outstanding share certificates and issue new
certificates reflecting the allowed interests under the Plan of Reorganization
and the Court's prior orders. The Court further ordered that Princeton and its
transfer agent are not subject to any claim based upon the cancellation of
outstanding share certificates and the issuance of new certificates in
accordance with the Court's orders.

Effective as of October 9, 2000 the trading symbol "PELT" was cancelled by the
NASD at the Company's request and no further trades will be made under that
symbol. The Company is currently processing exchanges of cancelled share
certificates for new certificates.

The Company has applied to the NASD through the sponsoring brokerage firm of
Peacock, Hislop, Staley and Given, Inc. to be listed on the Over the Counter
Bulletin Board (OTCBB) with a view toward establishing a broader market for
Princeton Shares.

Princeton has never paid any cash dividends on any equity securities, and no
change of this policy is under consideration by the Board of Directors.

Recent Sales of Unregistered Securities.  None.

CONFIRMATION OF SECURITIES HOLDINGS

The final shareholder equity base established by Order of the Bankruptcy Court
is set forth below:

     Shares recognized as of May 31, 2001. (2)                      6,554,351
     Shares recognized for issuance to William C. Taylor.(1)        4,369,567
           TOTAL SHARES (2)                                        10,923,918

(1) Represents forty percent (40%) of the total of all of Princeton's common
    stock which was outstanding as of the Final Order Allowing Shares. In the
    event that the Onset claim is subordinated to Class 12 Claims pursuant to
    Section 510(b) of the Bankruptcy Code, Taylor's shares will be increased in
    order to maintain his 40% ownership of the stock of Princeton American
    Corporation. This could result in a dilution in the value of shares held by
    other shareholders.

(2) Represents a downward adjustment in total shares from 14,148,047 as set
    forth in the May 31, 2000 and 2001 10KSBs This adjustment conforms with the
    Final Order Allowing Shares, after taking into consideration certain shares
    for which the 10:1 reverse split calculation had not been made.

(3) As of 5-31-02 10,928,418 shares of common stock have been approved by the
    Bankruptcy Court of which 7,460,893 have been issued to 347 holders of
    record. 3,462,525 shares have been non- responsive and represent 2,240
    holders.

ITEM 6 MANAGEMENT DISCUSSION AND ANALYSIS BACKGROUND:

During the past year Princeton American management has focused on:

1.   Upgrading the Company's two office buildings and solving the problems
     resulting from the "deferred maintenance" policies of prior management;

2.   Completing the task of establishing a final shareholder base and
     revitalizing the market for Princeton's shares;

3.   Returning the Company to financial stability including refinancing of both
     office buildings; and

4.   Payment of substantially all of the creditors claims, thereby moving
     Princeton closer to emergence from the bankruptcy proceedings. The proceeds
     resulting from the Southwest Bank loans were used to clear all of the
     company's prior debt including principal and interest to bankruptcy
     claimants. The balance is on deposit with the company's bank and will be
     used for working capital. 31 claims are still on the company's books which
     management considers invalid. At such time as the validity of these claims
     is determined an additional adjustment will be made.


The shareholder base has been carefully analyzed and significantly modified by
Court Orders. All old share certificates have been cancelled and new share
certificates issued to shareholders who have tendered their old shares.



                                       8
<PAGE>

The Company also focused its attention on the rehabilitation and marketing of
its two office buildings, which have benefited from the increase in demand for
office space in the Phoenix market over the past five years. Several tenant
leases have matured and have either been rolled over at higher prices, or the
tenants have moved elsewhere allowing the Company to replace them with higher
rent paying tenants. The office building at 2222 East Camelback Road is fully
occupied with annual gross revenues exceeding $700,000. It is now known as the
"Southwest Bank Building" in acknowledgement of that financial institution's
lease of the west half of the ground floor including the banking facilities
formerly occupied by Wells Fargo Bank. The lease runs for five years with two
five-year renewal options. Southwest Bank has completely refurbished this 8,057
square foot space. As of 5-31-02 the 2222 East Camelback Road building is 100%
occupied.

The office building at 4808 North 22nd Street was leased to Alliance Investors,
LLC. for a five year term commencing in February, 2001 and WRG Design for a
three year term commencing in February, 2002. Now fully occupied, this building
is currently producing approximately $407,900 in annual revenues.

Management does not anticipate needing additional capital during the next twelve
months and believes that it has sufficient captial to fund any capital
expenditures.

Management believes that the completion of these "clean up" activities this year
will put Princeton a major step closer to attracting potential investors and
merger prospects (in particular those that can take advantage of the Company's
$14,000,000 tax loss carry forward). Armed with a fundamentally sound financial
statement, management intends to pursue all available opportunities for
strategic alliances and potential acquisitions, with a view toward enhancing
shareholder value. While there can be no assurance that the Company will be
successful in doing so, Princeton has applied to the NASD to have its securities
qualify for trading on the OTC Bulletin Board.


ITEM 7.  FINANCIAL STATEMENTS

The full text of the Company's audited, consolidated financial statements for
the fiscal years ended May 31, 2002 and 2001 begins on page F-1 of this Report
and is incorporated herein by reference.

ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.



                                       9
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

The Directors and Executive Officers of the Company as of May 31, 2002 were:

   NAME                        AGE    POSITION              DATE ELECTED (*)
   ----                       -----   --------              ----------------
   William C. Taylor           70    Chairman, CEO &        December 20, 1997
                                     Director
   Roderick W. McKinnon III    55    Secretary, Treasurer   December 20, 1997
                                     & Director
   Scott E. Bird               78    Director               December 20, 1997

(*) Pursuant to Article III Section 3.9 of the Plan of Reorganization, the
Directors took office on the "Effective Date" of the Plan.

On May 1, 2001 Mr. Bird resigned as Treasurer and CFO of the Company. Mr.
McKinnon assumed that office on the same date.

                                     RESUMES

Scott E. Bird is the Managing Consultant of SASolutions, LLC, an integrated
business and information technology consulting group and President of Pacific
Aviation Services, an international aviation procurement and support company.
Mr. Bird served as Director and Chief Financial Officer of the Company until his
resignation as CFO in May, 2001. His term as a director will expire on the date
of the next Annual Shareholder's Meeting.

William C. Taylor served the Company as Executive Vice-President from July 1991
to April 1995 and as a Director from August 1994 to April 1995. Mr. Taylor is a
member (inactive) of the State Bar of Arizona and is a licensed realtor. He is a
managing partner in several real estate development companies. Mr. Taylor has
served as Chairman and Chief Executive Officer of the Company since its
reorganization. His term of office will expire on the date of the next Annual
Shareholders Meeting.

Roderick W. McKinnon III has been a Director and Secretary of the Company since
1997. He assumed the additional office of Treasurer on May 1, 2001. Since 1974,
Mr. McKinnon has been President of R.W. McKinnon & Co., Inc., an investment
banking and development service company. He graduated from Northern Arizona
University with a degree in Political Science and serves on several boards of
directors. His term of office will expire on the date of the next Annual
Shareholders Meeting.



                                       10
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation received
for the fiscal year ended May 31, 2002 for services rendered to the Company in
all capacities by the Company's Chief Executive Officer and other executive
officers.

SUMMARY COMPENSATION TABLE

    NAME AND PRINCIPAL      ANNUAL CASH               SECURITIES    ALL OTHER
       POSITION             COMPENSATION    OTHER (1)   OPTIONS    COMPENSATION
       --------             ------------    ---------   -------    ------------

  William C. Taylor         $96,000         $ 1,200      -0-          -0-
  Chairman CEO and
  Director

  Roderick W McKinnon       -0-             $ 1,200      -0-          -0-
  Secretary Treasurer
  Director

  Scott E Bird (2)
  Director                  -0-             $ 1,200      -0-          -0-

(1)  Directors are compensated at the rate of $200 for each formal meeting of
     the Board of Directors. There were six meetings in fiscal year 2002. These
     fees are unpaid as of May 31, 2002.

(2)  Mr. Bird is a shareholder of SASolutions, L.L.C. a financial consulting
     firm which received approximately $3,150.00 through May 31, 2002 for
     consulting services to the company.

(3)  Mr. McKinnon is associated with a real estate brokerage company that
     assisted Princeton with the leasing of several of its Suites. In connection
     with these services this firm will be paid $67,793.26 in real estate
     leasing commissions. As of May 31, 2002 $45,000 of this amount had been
     paid.



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as to shares of common stock
owned by (i) each person known to beneficially own more than 5% of the
outstanding common stock , (ii) each director and named executive officer of the
Company, and (iii) all executive officers and directors of the Company as a
group.

              NAME               TITLE          COMMON SHARES  PERCENT OF CLASS
William C. Taylor             Chairman & CEO      4,502,529      (1) 41.22%
2222 East Camelback Road
Suite 105
Phoenix, Arizona 85016

(1)  Includes 132,962 shares which Mr. Taylor owned prior to the Effective Date
     of the Plan of Reorganization.


    The above percentages of ownership are based on 10,923,918 shares of the
Company's common stock outstanding based upon the Bankruptcy Court Order dated
February 3, 2000. Beneficial ownership has been determined in accordance with
rule 13d-3 of the Securities and Exchange Act of 1934. Pursuant to the rules of
the Securities and Exchange Commission, shares of common stock that each named
person and group has the right to acquire within 60 days pursuant to options,
warrants, conversion privileges or other rights are deemed outstanding for
purposes of computing shares beneficially owned by and the percentage of
ownership of each such person and group. However, such shares are not deemed
outstanding for purposes of computing the shares beneficially owned by, or
percentage of ownership of, any other person or group.



                                       11
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding Princeton's transactions with related parties since
November 1996 is included above in: Item 1 "Description of Business - Sales and
Transfers Prior to Bankruptcy, and Sales and Transfers of Assets"; Item 3 -
"Legal Proceedings"; and Item 5 - "Market for the Registrant's Common Stock and
Related Shareholders Matters - Adjustments of Outstanding Shares and
Shareholders."

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits


     8K Dated June 27, 2001 Regarding the Testasecca, Etal vs Princeton American
     and William C. Taylor litigation

     8K dated June 18, 2002 regarding Princeton American's motion to the
     Bankruptcy Court regarding non responsive claimants and shareholders. The
     motion asked for the court's permission to cancel shares and claims of non
     responsive shareholder's after the company made certain efforts to locate
     each of these people. This motion was granted by the Court on July 31,
     2002.


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

PRINCETON AMERICAN CORPORATION

By: /s/ William C. Taylor
    ------------------------------------
         William C. Taylor
         Chairman, CEO and Director

Date:    8/28/02
         -------------------------------

    In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

                     SIGNATURE                    TITLE                 DATE
                     ---------                    -----                 ----
      By: /s/ William C. Taylor             Chairman, CEO and          8/28/02
         -------------------------          Director                   -------
             William C. Taylor

      By: /s/ Scott E. Bird                 Treasurer, CFO and         8/28/02
         -------------------------          Director                   -------
             Scott E. Bird

      By: /s/ Roderick W. McKinnon III      Secretary and Director     8/28/02
         ------------------------------                                -------
             Roderick W. McKinnon III


                                       12

<PAGE>

                         PRINCETON AMERICAN CORPORATION

                              FINANCIAL STATEMENTS

                               For the Years Ended

                              May 31, 2002 and 2001






                                      F-1


<PAGE>









                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Princeton American Corporation

We have audited the accompanying balance sheets of Princeton American
Corporation as of May 31, 2002 and 2001, and the related statements of
operations and comprehensive loss, changes in stockholders' deficit, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Princeton American Corporation
as of May 31, 2002 and 2001 and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1 to the
financial statements, the Company has been involved in litigation and been under
supervision of the Bankruptcy Court since 1997. Because of this and other
factors, the Company has not been able to generate net income from operations
since its reorganization and the Company has a stockholders' deficit of
$2,848,199 at May 31, 2002. In April 2002, the Company refinanced its office
buildings, which allowed the Company to settle certain litigation and
substantially pay its bankruptcy claims. Management's current plans to operate
the Company are described in Note 1; however, management has not had adequate
time to demonstrate if its plans will be successful. As such, there still exists
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

Evers & Company, Ltd.
Phoenix, Arizona
August 6, 2002


                                      F-2


<PAGE>

                         PRINCETON AMERICAN CORPORATION
                                 BALANCE SHEETS
                              MAY 31, 2002 AND 2001

                                     ASSETS
<TABLE>
<CAPTION>

                                                                                   2002           2001
                                                                                   ----           ----
Current assets:
<S>                                                                             <C>               <C>
    Cash and cash equivalents                                                   $ 49,155          2,541
    Loan retention account                                                       224,605              -
    Accounts receivable, less allowance for doubtful accounts
       of $30,293 at May 31, 2002                                                 38,477          6,068
    Investments in marketable securities                                          45,762         61,678
    Prepaid expenses                                                              59,377         33,442
    Other assets                                                                  26,365         11,009
                                                                             ------------   ------------
       Total current assets                                                      443,741        114,738
                                                                             ------------   ------------

PREPAID EXPENSES                                                                  55,976         59,798

INVESTMENT IN COMMISSION CONTRACT                                                209,361        206,161

PROPERTY AND EQUIPMENT, NET                                                    1,394,239      1,379,143

LOAN COSTS, net of accumulated amortization of $3,143
    at May 31, 2002                                                               59,018              -
                                                                             ------------   ------------

       Total assets                                                          $ 2,162,335      1,759,840
                                                                             ============   ============


                  LIABILITIES AND STOCKHOLDERS' DEFICIT


CURRENT LIABILITIES:
    Mortgage notes payable - current portion                                    $ 53,990         30,558
    Note payable - other                                                               -        133,931
    Notes payable, officers                                                       89,000        130,000
    Accounts payable                                                              21,762        184,678
    Bankruptcy claims                                                            169,773        679,289
    Liabilities in dispute                                                             -        619,603
    Accrued interest                                                              89,380        189,924
    Accrued real estate taxes                                                     43,941        310,221
    Payroll and sales taxes payable                                               13,076         15,487
    Advance rental income and tenant security deposits                            35,473        126,317
                                                                             ------------   ------------
       Total current liabilities                                                 516,395      2,420,008

TENANT SECURITY DEPOSITS - LONG TERM                                              56,163         48,016
MORTGAGE NOTES PAYABLE, NET OF CURRENT PORTION                                 4,437,976      1,743,869
                                                                             ------------   ------------
                                                                               5,010,534      4,211,893
                                                                             ------------   ------------


STOCKHOLDERS' DEFICIT:
    Common stock, par value $.001, 110,000,000 shares authorized
       see note 7 regarding shares issued and outstanding                         15,000         15,000
    Additional paid-in-capital                                                 2,460,350      2,460,350
    Accumulated deficit                                                       (5,329,074)    (4,506,852)
                                                                             ------------   ------------
                                                                              (2,853,724)    (2,031,502)

    Net unrealized gain (loss) on marketable securities                            5,525       (420,551)
                                                                             ------------   ------------

       Total stockholders' deficit                                            (2,848,199)    (2,452,053)
                                                                             ------------   ------------

       Total liabilities and stockholders' deficit                           $ 2,162,335      1,759,840
                                                                             ============   ============

                 See accompanying notes to financial statements

                                      F-3

<PAGE>

                         PRINCETON AMERICAN CORPORATION

                 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

                    For the Years Ended May 31, 2002 and 2001

                                                    2002            2001
                                                    ----            ----
REVENUES

     Rental income                             $   983,716        837,326
     Parking and other                              33,588         90,119
                                               -----------    -----------
                                                 1,017,304        927,445
                                               -----------    -----------
COSTS AND EXPENSES

     Building operating costs                      337,082        334,956
     Professional fees                             209,222        166,993
     Payroll and payroll taxes                     131,053        140,986
     Ground lease                                  125,809        124,972
     Depreciation and amortization                 109,363         93,472
     Consulting                                     29,256         49,650
     Other                                          64,189         50,912
                                               -----------    -----------
         Total costs and expenses                1,005,974        961,941
                                               -----------    -----------

INCOME (LOSS) FROM OPERATIONS                       11,330        (34,496)
                                               -----------    -----------

OTHER INCOME (EXPENSE)

     Interest and dividend income                   18,904         19,766
     Interest expense                             (356,849)      (235,928)
     Loss on settlement of claims                  (44,562)            --
     Impairment of marketable securities          (441,800)            --
     Other                                          (9,195)       (12,424)
                                               -----------    -----------
                                                  (833,502)      (228,586)
                                               -----------    -----------

NET LOSS BEFORE INCOME TAXES                      (822,172)      (263,082)

INCOME TAXES                                            50             50
                                               -----------    -----------

NET LOSS                                       $  (822,222)      (263,132)
                                               ===========    ===========

NET LOSS PER COMMON SHARE, BASIC AND DILUTED   $     (0.07)         (0.02)
                                               ===========    ===========


NET LOSS                                       $  (822,222)      (263,132)

NET UNREALIZED LOSS ON MARKETABLE SECURITIES       (15,724)       (45,360)
                                               -----------    -----------

COMPREHENSIVE LOSS                             $  (837,946)      (308,492)
                                               ===========    ===========

                 See accompanying notes to financial statements

                                      F-4

<PAGE>


                            PRINCETON AMERICAN CORPORATION
                     Statement of Changes in Stockholders' Deficit
                       For the Years Ended May 31, 2002 and 2001

                                                                                                        Unrealized
                                                                        Additional                      Gain (Loss)
                                                          Common         Paid-in       Accumulated           on
                                                          Stock          Capital       Deficit           Securities
                                                      --------------    ----------    -------------   --------------

Balance at May 31, 2000                               $   15,000         2,460,350     (4,243,720)       (375,191)

Net loss for the year
     ended May 31, 2001                                       --                --       (263,132)             --

Unrealized loss on
     marketable securities                                    --                --             --         (45,360)

                                                      ----------        ----------     ----------      ----------

Balance at May 31, 2001                                   15,000         2,460,350     (4,506,852)       (420,551)

Net loss for the year
     ended May 31, 2002                                       --                --       (822,222)             --

Impairment of
     marketable securities                                    --                --             --         441,800

Unrealized loss on
     marketable securities                                    --                --             --         (15,724)

                                                      ----------        ----------     ----------      ----------

Balance at May 31, 2002                               $   15,000         2,460,350     (5,329,074)          5,525
                                                      ==========        ==========     ==========      ==========



                 See accompanying notes to financial statements


                                      F-5

<PAGE>

                         PRINCETON AMERICAN CORPORATION

                            STATEMENTS OF CASH FLOWS

                    For the Years Ended May 31, 2002 and 2001

                                                                                              2002                 2001
                                                                                              ----                 ----
Cash flows from operating activities:

      Net loss                                                                           $ (822,222)            (263,132)
      Adjustments to reconcile net loss to net
           cash used in operating activities:
           Depreciation                                                                     109,363               93,472
           Interest income on investment contract                                           (18,450)             (18,155)
           Rent income allowance in exchange for tenant payment of costs                   (121,424)             (33,634)
           Impairment on marketable securities                                              441,800                    -
           Loss on settlement of claims                                                      44,562                    -
           Loss on disposition of assets                                                          -                1,248
           Increase (decrease) in cash due to change in:
               Accounts receivable                                                          (32,409)              (6,068)
               Prepaid expenses                                                              (9,618)             (73,073)
               Other assets                                                                 (27,851)             (11,009)
               Accounts payable and accrued expenses                                       (431,608)             113,372
               Bankruptcy claims                                                         (1,045,869)                   -
               Accrued interest                                                            (100,544)              67,761
               Rent deposits                                                                  8,434               43,353
                                                                                  ------------------     ----------------
                Net cash used in operating activities                                    (2,005,836)             (85,865)
                                                                                  ------------------     ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:

      Payments on notes receivable                                                                -               18,149
      Purchase of property and equipment                                                    (91,023)             (82,903)
      Payments on investment contract                                                        15,442               14,977
                                                                                  ------------------     ----------------
           Net cash used in investing activities                                            (75,581)             (49,777)
                                                                                  ------------------     ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:

      Payments on notes payable                                                            (265,329)                   -
      Conversion of account payable to note payable                                               -               19,821
      Proceeds from (payment on) loan from officers                                         (41,000)              30,000
      Payments on mortgage notes payable                                                 (1,910,272)             (27,398)
      Payment of loan costs on mortgage notes payable                                       (62,161)                   -
      Proceeds from mortgage notes payable, net of retention                              4,275,395                    -
      Proceeds from bank loans                                                              131,398              114,110
                                                                                  ------------------     ----------------
           Net cash provided by financing activities                                      2,128,031              136,533
                                                                                  ------------------     ----------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                    46,614                  891

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                                  2,541                1,650
                                                                                  ------------------     ----------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                                   $ 49,155                2,541
                                                                                  ==================     ================

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION

CASH PAID DURING THE PERIOD FOR INTEREST                                                  $ 538,478              153,443
                                                                                  ==================     ================
CASH PAID DURING THE PERIOD FOR INCOME TAXES                                                   $ 50                   50
                                                                                  ==================     ================
NON-CASH INVESTING AND FINANCING ACTIVITIES:

      Issuance of rent credits for tenant improvements paid by tenant                      $ 30,293              107,225
                                                                                  ==================     ================
</TABLE>


                 See accompanying notes to financial statements


                                      F-6


<PAGE>



                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.          BASIS OF PRESENTATION

            The following is a summary of the significant accounting policies
                  followed by Princeton American Corporation (the Company). The
                  policies conform with accounting principles generally accepted
                  in the United States of America and require management to make
                  estimates and assumptions that affect the reported amounts of
                  assets, liabilities, revenues and expenses as well as
                  disclosures of contingent assets and liabilities in the
                  financial statements. Actual results could differ from those
                  estimates.

            During the years ended May 31, 1998 and 1997, the Company did not
                  have access to adequate records to file audited financial
                  statements, as required by the Securities and Exchange
                  Commission. The Company requested a waiver of its filing
                  requirements for the years ended May 31, 1997 and 1998 and its
                  quarterly filings through February 28, 2000. The Company can
                  not obtain a waiver; however, the Securities and Exchange
                  Commission has indicated that action is unlikely for failure
                  to file missing reports prior to May 31, 2000. The Company
                  included in their February 28, 2001 10Q, reissued May 31, 2000
                  financial statements, which included an audited balance sheet
                  as of May 31, 1998.

            The financial statements of the Company are presented on a
                  historical cost basis. The estimated fair market value of the
                  Company's assets at the time of reorganization exceeded the
                  Company's post-petition liabilities and allowed claims.
                  Consequently, assets and liabilities were not restated to fair
                  market value as provided by SOP 90-7.

            As of May 31, 2002 the Company had a stockholders' deficit of
                  $2,848,199. Additionally, the Company has not been able to
                  generate net income from operations since its reorganization.
                  The Company is currently under the jurisdiction of the
                  Bankruptcy Court and is still involved in certain litigation,
                  as described in Notes 7 and 8 to these financial statements.
                  To address these uncertainties, management has taken the
                  following actions.

o    Obtained financing for both of its commercial office buildings

o    Implemented changes, which it believes will reduce the cost of operating
     the buildings.

o    Settled a substantial portion of litigation, which management expects will
     reduce legal and professional fees during the year ending May 31, 2003.


                                      F-7


<PAGE>


                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001



1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     a. BASIS OF PRESENTATION, CONTINUED

          o    Expects to be released from the supervision of the Bankruptcy
               Court, with settlement of the Weiss litigation,

          o    Intends to pursue listing of the Company's stock on NASDAQ

          o    Intends to explore the possibility of future mergers and/or
               acquisitions

      b.    ORGANIZATION AND OPERATIONS

            Princeton American Corporation is organized under the laws of the
                  State of Nevada and currently owns two office buildings in
                  Phoenix, Arizona. The Company was previously engaged in both
                  the real estate and hair care products industries. The Company
                  filed for bankruptcy in December 1996 and subsequently
                  disposed of substantially all its assets during the years
                  ended May 31, 1997 and 1998, except for the two commercial
                  buildings and certain investments. The trustee combined
                  substantially all the Company's operating subsidiaries into
                  Princeton American Corporation. The Court approved the Plan of
                  Reorganization for the Company in November 1997.

     c. CASH EQUIVALENTS

            Cash equivalents include highly liquid debt instruments and other
short-term investments with an original maturity of three months or less.

     d. ACCOUNTS RECEIVABLE

            Accounts receivable represents rent and other amounts due. An
                  allowance is provided on a specific identification basis for
                  all balances which management estimates may not be fully
                  collectible

      e.    MARKETABLE SECURITIES, AVAILABLE FOR SALE

            Marketable securities available for sale are recorded at their
                  quoted market prices. Unrealized gains and losses on these
                  securities are included as a separate component of
                  comprehensive income and shareholders' equity until realized.
                  Realized gains and losses on securities available for sale are
                  computed based upon the average cost of the investment.

                                       F-8

<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

      f.    PROPERTY AND EQUIPMENT

            Property and equipment are recorded at cost and are being
                  depreciated principally on the straight-line method over the
                  estimated useful lives of the assets, which range from three
                  to forty years.

      g.    STOCK OPTIONS

            The Company has elected to follow Accounting Principles Board
                  Opinion No. 25 "Accounting for Stock Issued to Employees"
                  (APB25) and related interpretations in accounting for its
                  employee stock options and awards. Under APB 25, no
                  compensation expense is recognized when the exercise price of
                  the options equals the fair value (market price) of the
                  underlying stock on the date of grant. The Company has adopted
                  the disclosure provisions of Statement of Financial Accounting
                  Standards No. 123 Accounting for Stock-Based Compensation.

      h.    INCOME TAXES

            Income taxes are accounted for under the asset and liability method.
                  Deferred tax assets and liabilities are recognized for the
                  future tax consequence attributable to differences between the
                  financial statement carrying amount of existing assets and
                  liabilities; and their respective tax bases, including
                  operating loss and tax credit carryforwards. Deferred tax
                  assets and liabilities are measured using enacted tax rates
                  expected to apply to taxable income in the years in which
                  those temporary differences are expected to be recovered or
                  settled. The effect in deferred tax assets and liabilities of
                  a change in tax rates is recognized in income in the period
                  that includes the enactment date. Valuation allowances are
                  established when necessary to reduce deferred tax assets to
                  the amount expected to be realized.

      i.    EARNINGS PER SHARE

            The Company has adopted Statement of Financial Accounting
                  Standards No. 128 "Earnings Per Share". The standard
                  simplifies the standards of computing earnings per share and
                  requires presentation of two new amounts, basic and diluted
                  earnings per share. Net loss per share is computed by dividing
                  the loss attributable to common shareholders by the weighted
                  average number of shares outstanding during the period, which
                  was approximately 11,000,000 for the years ended May 31, 2002
                  and 2001. There is uncertainty regarding the number of shares
                  outstanding. Please read note 7.



                                       F-9

<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001



2.    INVESTMENTS IN MARKETABLE SECURITIES AVAILABLE FOR SALE

      Marketable securities consist of the following investments in common stock
at May 31, 2002 and 2001:

                                                2002             2001
                                                ----             ----

        Exten Industries                  $   37,857           55,465
        Stratford American                     3,000            4,000
        Other securities                       4,905            2,213
                                             -------        ---------
                                          $   45,762           61,678
                                          ==========        =========

      The total net unrealized gain at May 31, 2002 was $5,525 and the total
            net unrealized loss at May 31, 2001 was $420,551. The net unrealized
            loss increased by $15,724 and $45,360 during the years ended May 31,
            2002 and 2001, respectively.

       The Company retains investments in Trans Pacific Group and Sgarlato
            Laboratories; however, management considers these investments to be
            permanently impaired. The Company recognized a loss of $441,800 on
            these investments during 2002.

3.    INVESTMENT IN COMMISSION CONTRACT

      In March 1994, the Company acquired the rights to the commission on a
            ground lease for a mobile home park in Mesa, Arizona. The commission
            is based upon a fifty-five (55) year ground lease. Annual payments
            ranged from $11,750 in 1994 to $27,000 in 2031. For the years ended
            May 31, 2002 and 2001, the commission contract was valued at
            $209,361 and $206,161, respectively. The valuation is determined by
            calculating the net present value of the quarterly payments at an
            imputed interest rate of twelve percent (12%). The Company
            recognizes any fluctuation in the investment as interest income or
            expense in the year of fluctuation.

4.    PROPERTY AND EQUIPMENT

      Property and equipment consist of the following at May 31, 2002 and 2001:

                                              2002                    2001
                                              ----                    ----

Office buildings                          $ 1,296,786             1,296,786
Leasehold improvements                        697,167               577,950
Office furniture and equipment                  6,240                 4,140
                                          -----------           -----------
                                            2,000,193             1,878,876
Less:  Accumulated depreciation              (605,954)             (499,733)
                                          -----------           -----------
                                          $ 1,394,239             1,379,143

                                      F-10

<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001


5.    NOTES PAYABLE

      During the year ended May 31, 2002 the Company refinanced the 2222 E.
            Camelback Road office building for $2,825,000 and the 4808 N. 22nd
            Street office building for $1,675,000. The proceeds from the
            refinancing were used to payoff the existing mortgage notes, pending
            legal claims and bankruptcy claims. An escrow account for property
            taxes was set up using funds from the notes and monthly payments of
            one-twelfth of the annual property taxes are to be made to this
            account. A portion of the proceeds to be used for settlement of the
            various claims has been set aside in a loan retention account. The
            funds are advanced to the Company as needed to payoff existing
            liabilities. The mortgage notes are secured by a first deed of trust
            and an assignment of the rents and related receivables of the
            respective office buildings.

      The terms of the Vanderford note that was paid off have been under
            dispute since the bankruptcy court modified the terms. The Company
            reached a settlement with Vanderford of $1,100,000 to cover
            outstanding principal and interest. This amount was $127,812 in
            excess of what had been recorded by the Company as a liability, and
            has been recorded as a loss on settlement.

      Mortgage notes payable consist of the following at May 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                                                2002                    2001
                                                                                                ----                    ----
<S>         <C>                                                                             <C>                     <C>
            Mortgage  note  payable,  secured  by a first  deed of  trust  on the
            building at 2222 E. Camelback Road,  payable in monthly  installments
            of $22,504 including interest at 8.25%, through April 2007                      $ 2,819,976                    -

            Mortgage  note  payable,  secured  by a first  deed of  trust  on the
            building  at 4808 N. 22nd St.,  payable  in monthly  installments  of
            $13,059 including interest at 8%, through April 2004                              1,671,990                    -

            Mortgage  note  payable,  secured  by a first  deed of  trust  on the
            building  at 4808 N. 22nd St.,  payable  in monthly  installments  of
            $6,946 including interest at 8%, repaid in 2002                                           -              806,826



                                      F-11

<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001


5.    NOTES PAYABLE, CONTINUED

            Mortgage note payable,  Vanderford,  secured by a first deed of trust
            on the  building at 2222 E.  Camelback  and a second deed of trust on
            the  building  at 4808 N. 22nd St.,  payable in monthly  installments
            of $7,338 including interest at 8%, repaid in 2002                                         -             967,601
                                                                                            -------------         ----------
                                                                                               4,491,966           1,774,427
            Less current portion                                                                 (53,990)            (30,558)
                                                                                            -------------         ----------

            Long-term debt, net of current portion                                           $ 4,437,976           1,743,869
                                                                                              ==========          ==========


      Notes payable - other consist of the following at May 31, 2002 and 2001:

                                                                                                 2002                2001
                                                                                                 ----                ----
            Line of credit of $200,000, interest accrued at prime plus 2%,
            repaid in 2002                                                                  $           -           114,110

            Note due in monthly installments of $3,500 with a balloon payment of
            $12,821 due in August 2001, interest at 12%, secured by
            investment in Exten stock, repaid in 2002                                                   -            19,821
                                                                                             ------------         -----------


                                                                                             $          -         $ 133,931
                                                                                             ============         ===========
</TABLE>


        Maturities of long-term debt at May 31, 2002 are as follows:

            YEAR ENDED MAY 31,                            AMOUNT

                  2003                            $       53,990
                  2004                                 1,689,048
                  2005                                    41,626
                  2006                                    45,245
                  2007                                 2,662,057
                                                       ---------

                                                      $4,491,966

                                      F-12



<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001


6.    NOTES PAYABLE, OFFICERS AND RELATED PARTY TRANSACTIONS

      At May 31, 2002, the Company owed an officer $89,000 in principal and
            $9,774 in accrued interest under the terms of three 12% promissory
            notes that required payments of $5,000 per month beginning January
            2000. The Company has not complied with the repayment terms of these
            agreements. During the year ended May 31, 2002 the Company made
            principal payments of $16,000 and interest payments of $20,200 in
            partial payment of the notes. The Company also paid $25,000 in
            principal and $5,750 in interest to pay in full a note to a former
            officer. Interest expense on the officers' notes totaled $14,870 in
            2002 and $14,700 in 2001.

      During the years ended May 31, 2002 and 2001 the Company paid a director
            consulting fees of $3,150 and $49,650, respectively.

      Commission fees equal to 4% of the gross lease amount on several leases in
            the office buildings are being paid to a Real Estate firm with which
            one of the directors of the company is affiliated. During the year
            ended May 31, 2002 payments of $45,000 were made to this firm.

      The Company pays each of its three directors $200 for each board meeting
            attended. During the year ended May 31, 2002 there were six
            meetings. Accrued directors' fees of $12,700 are due for meetings in
            the current and prior years.

7.    BANKRUPTCY CLAIMS

      The Company filed for bankruptcy on December 11, 1996 and is currently
            operating as a reorganized debtor under a Joint Plan of
            Reorganization confirmed by the United States Bankruptcy Court for
            the District of Arizona on November 19, 1997.

      Subsequent to the Company's filing in December 1996 and prior to the
            reorganization in December 1997, the Company was operated by a
            court-appointed trustee. During that time, the trustee liquidated
            various assets of the Company other than certain real estate
            holdings in Phoenix, Arizona and certain investments in marketable
            securities. William Taylor and the Trustee filed a Joint Plan of
            Reorganization in November 1997, which was approved in December
            1997. Some of the key provisions of the Plan are:

          o    The Plan classifies various secured, unsecured and non-priority
               unsecured claims. The Plan also classifies post petition
               administrative claims. As confirmed, the Plan called for the
               reorganized debtor to make distributions to unsecured creditors
               within one year of the Plan's effective date, December 20, 1998.
               Once distributions were made to unsecured creditors, the Plan
               would be substantially consummated within the meaning of the
               Bankruptcy Code.

          o    Preferred shareholders received common stock of the Company.


                                      F-13

<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001


7.    BANKRUPTCY CLAIMS, CONTINUED

          o    Approved common shareholders will retain their interest in the
               Company. The interest of shareholders with 10,000 shares or less
               (as listed on the records of American Stock Transfer only) shall
               be allowed, unless an objection was filed and upheld.

          o    William Taylor is to receive 40% of the Company's outstanding
               stock, upon payment of all unsecured claims. Prior to payment,
               Taylor's stock is to be held in escrow. Taylor's interest is
               based upon his claim of $990,134 for consulting fees and other
               costs.

          o    The Company's wholly owned subsidiaries, 88 Redevelopment and
               4808 Corporation, were merged into Princeton American
               Corporation.

      The Plan was subsequently modified in January 1999 to extend certain
            deadlines of the Plan, including the deadline for making
            distributions to unsecured creditors. These deadlines were extended
            to 180 days following the entry of a final, non-appealable order
            resolving the claim of Harry and Irene Weiss (Note 8).

      The deadline for filing proof of ownership interest was also extended
            several times in an effort to give stockholders ample opportunity to
            file their proofs of interest. The Company and the Court compiled a
            final listing of valid proofs of interest. Management currently
            believes that the number of shares to be issued may be reduced to
            approximately 11,000,000 shares. The Court initially disallowed
            approximately 12,000,000 shares in this process primarily because
            the stockholders, including many brokers, failed to file proofs of
            interest. Upon completion of this process, stockholders' equity was
            restated effective to the year ended May 31, 1997 to reflect total
            capitalization of $2,475,350. Capitalization was computed based upon
            Taylor's ownership interest of 40% of all common stock in settlement
            of his claim for $990,134.

      On September 15, 2000, the Bankruptcy Court ordered Princeton American
            and its transfer agent, American Stock Transfer & Trust ("AST") to
            cancel all outstanding Princeton American share certificates and
            issue new share certificates reflecting the allowed interest of
            shareholders under the Plan of Reorganization for Princeton American
            and the Court's prior orders. The Court further ordered that
            Princeton American and AST are not subject to any claim based upon
            the cancellation of outstanding share certificates and the issuance
            of new certificates in accordance with the Court's orders. The final
            order became final and non-appealable on September 29, 2000.

      Princeton American is in the process of implementing the Court's order,
            and new share certificates will be issued for the allowed interests
            as soon as reasonably practicable. As of May 31, 2002, 7,460,893
            shares had been issued.



                                      F-14
<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001


7.    BANKRUPTCY CLAIMS, CONTINUED

      In connection with the issuance of new certificates, Princeton American
            has also initiated a process to change its trading symbol. Effective
            as of October 9, 2000, the trading symbol, PELT, has been officially
            cancelled, and no further trades will be made under that symbol.
            After new certificates have been issued to a majority of those
            shareholders possessing an allowed interest, a new trading symbol
            will be issued to Princeton American. The company has applied to the
            NASD to be listed on the Over the Counter Bulletin Board (OTCBB).

      In April of 2002 the Company refinanced its office buildings and used a
            portion of the proceeds to begin settlement of the bankruptcy
            claims. Payments of $1,033,104 in principal and $253,289 in accrued
            interest were paid during the year toward the bankruptcy claims and
            the settlement of litigation (see note 8). Management determined
            that $9,229 of claims (including principal and accrued interest) was
            invalid and a gain of $23,646 has been recognized in connection with
            the cancellations and settlements. At May 31, 2002 the unpaid
            bankruptcy claims were $169,773 and accrued interest at 8% was
            $60,269.

8.    LITIGATION AND LIABILITIES IN DISPUTE

      The Company is involved in litigation arising from actions of the Company
prior to the bankruptcy filing.

      In September 1993, the Company acquired residential real estate from
            Harry and Irene Weiss in exchange for 600,000 shares of the
            Company's restricted common stock, with an agreed upon value of
            $1.00 per share. As part of the agreement, the Company agreed that
            it would not sell or offer its stock for two years at a price less
            than $1.00 per share. However, the Company subsequently violated
            that agreement.

      Weiss filed a proof of claim with the Bankruptcy Court for an unsecured,
            pre-petition claim of $812,707. The Company objected to both the
            priority and amount of the claim. The Bankruptcy Court initially
            upheld the Company's objection and found that the Weiss claim was
            subordinated to the level of a shareholder claim, rather than an
            unsecured claim. The Court determined the amount of the claim to be
            $619,603. The District Court subsequently reversed the Bankruptcy
            Court and found that the Weiss's were entitled to assert an
            unsecured non-priority claim in the same amount. The Company
            appealed this decision.

      The Weiss's also applied for an award of attorney's fees, which was
            denied. They also sought to convert the bankruptcy proceedings to
            Chapter 7, which would require liquidation of the Company's assets.
            The Bankruptcy Court denied their motion.


                                      F-15

<PAGE>


                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001


8.    LITIGATION AND LIABILITIES IN DISPUTE, CONTINUED

      As the result of mediation proceedings, on February 9, 2001 the Company
            and Weiss agreed to settle their dispute for $560,000 in cash, plus
            interest at 10%, payable on the earlier of February 9, 2002 or the
            sale or refinancing of the 4808 Building. A gain of $59,603 was
            recognized in connection with the settlement. The claim of $560,000
            along with accrued interest of $76,823 was paid during the year
            ended May 31, 2002.

      Onset Investments has filed two proofs of claim, totaling $200,713 for
            damages resulting from securities transactions prior to the
            bankruptcy filing. The Company has objected to the validity,
            priority and amount of these claims and intends to defend these
            claims vigorously. To date, the Company and Onset have been unable
            to settle the dispute and therefore the claim is currently
            unresolved and scheduled for a hearing. Legal counsel is unable to
            determine the outcome and amount of potential loss from this claim,
            if any.

      In May 2001 a group of individuals filed a motion to set aside the
            Court Order, which canceled all outstanding share certificates and
            ordered the issuance of new shares. The group of individuals
            obtained stock in the Company after confirmation of the Plan in
            November 1997 and asserted that the Company and its president failed
            to adequately notify them that the stock obtained might not be valid
            under the plan. On November 8, 2001 the Bankruptcy Court entered an
            order denying the motion. The ruling was appealed and the District
            Court issued an order to show cause as to why the appeal should not
            be dismissed. The group of individuals also filed a separate
            Complaint asserting claims for equitable relief, securities fraud,
            breach of fiduciary duty and negligence. The appeal was dismissed on
            July 8, 2002.

9.    LEASE COMMITMENTS

      The Company leases office space in its commercial buildings located at
            2222 E Camelback and 4808 North 22nd Street in Phoenix, Arizona.
            Future minimum lease payments required under these leases are as
            follows:

                YEAR ENDED MAY 31,                          AMOUNT
                -----------------                           ------

                        2003                             $    975,197
                        2004                                  927,337
                        2005                                  865,162
                        2006                                  440,496
                                                         ------------
                                                         $  3,208,192
                                                         ============

      Effective April 30, 2000, the Company and a former tenant entered into a
            Lease Termination and Release Agreement, whereby the Company was
            required to pay the tenant $50,000. In connection with a new
            five-year lease, the new tenant paid a $75,000 fee to obtain the
            right to lease the space.



                                      F-16

<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001

9.    LEASE COMMITMENTS, CONTINUED

       The office building located at 2222 E. Camelback Road is subject to
            two ground leases. The first lease was entered into on November
            1, 1974. The second lease was entered into on August 1, 1977.
            Both leases are net leases, with terms of 99 years. On the 15th
            anniversary and for each succeeding ten-year term, the rent is to
            be adjusted to an annual rate equal to 8% of the fair market
            value of the leased premises, excluding improvements. The rate on
            the first lease was adjusted on November 1, 1999 to a monthly
            rate of $4,933. The second lease was adjusted to a monthly rate
            of $3,100 on the 15th anniversary of the lease and will be
            adjusted in 2002. Rent expense on these two leases for the years
            ended May 31, 2002 and 2001 was $96,400 for each year.

      The office building located at 4808 N. 22nd Street is subject to a
            ground lease, the term of which extends through July 31, 2031. The
            lease is a net lease. The rental rate as of May 31, 2002 was $2,462
            and is subject to an annual adjustment based on the Consumer Price
            Index. Rent expense on this lease for the years ended May 31, 2002
            and 2001 was $29,409 and $28,572, respectively.

      The Company has a limited number of tenants in both buildings. As such,
            the loss of certain tenants could adversely impact the Company.
            Additionally, accounts receivable are from a limited number of
            tenants.

      The Company's future minimum lease obligations on the ground leases for
            the next five years are approximately $126,000 per year, based upon
            the current valuation.

10.   DEFERRED RENTAL INCOME

      During the year ended May 31, 2001, the Company negotiated two leases that
            provided for a tenant improvement allowance and lease commission to
            be paid by the tenants and then deducted from the rent due during
            the 3rd through 12th months of the leases. The total amounts of the
            tenant improvements of $107,225 and the leasing commission of
            $17,540 were capitalized and are being amortized over the life of
            the lease. The deferred rental income is being amortized on a
            straight-line basis over ten months. Deferred rental income of
            $33,634 was recognized during the year ended May 31, 2001 leaving a
            balance of $91,131 at May 31, 2001. The remaining balance was
            recognized during the year ended May 31, 2002.


                                      F-17

<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001


11.   DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

      Statement of Financial Accounting Standards No. 107, "Disclosures about
            Fair Value of Financial Instruments", requires that the Company
            disclose estimated fair values for its financial instruments. The
            following summary presents a description of the methodologies and
            assumptions used to determine such amounts.

      Fair value estimates are made at a specific point in time and are based
            on relevant market information and information about the financial
            instrument; they are subjective in nature and involve uncertainties,
            matters of judgment and, therefore, cannot be determined with
            precision. These estimates do not reflect any premium or discount
            that could result from offering for sale at one time the Company's
            entire holdings of a particular instrument. Changes in assumptions
            could significantly affect the estimates.

      Since the fair value is estimated as of May 31, 2002, the amounts that
            will actually be realized or paid at settlement of the instruments
            could be significantly different.

      The carrying amount of cash and cash equivalents is assumed to be the
            fair value because of the liquidity of these instruments. The
            recorded amount of the investment in marketable securities
            approximates market based upon quoted market values. The investment
            in the commission contract has been discounted to its estimated
            present value using market rates of interest. Accounts payable and
            accrued expenses approximate fair value because of the short
            maturity of these instruments. The recorded balance of notes payable
            and bankruptcy claims are assumed to be the fair value, since the
            rates specified approximate current market rates.

12. INCOME TAXES

      The components of net deferred tax assets at May 31, 2002 and 2001,
assuming a federal tax rate of 34% and a 7% state rate, are as follows:

                                                         2002            2001
                                                         ----            ----

   Net operating and capital loss carryforwards     $ 5,230,000       5,100,000
   Depreciation of marketable securities                -               170,000
   Difference in basis of property & equipment          100,000         110,000
   Accrued real estate taxes                             20,000         120,000
   Less valuation allowance                          (5,350,000)     (5,500,000)
                                                      ---------       ---------
   Net deferred tax assets                          $      -               -
                                                    ===========       ==========

      The expected tax benefit from the net loss before income taxes was
            offset by a valuation allowance, since the Company has not yet
            developed a history of profitable operations. During the years ended
            May 31, 2002 and 2001 the valuation allowance increased (decreased)
            by approximately ($150,000) and $40,000, respectively.



                                      F-18

<PAGE>

                         PRINCETON AMERICAN CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                              MAY 31, 2002 AND 2001



12. INCOME TAXES, CONTINUED

      At May 31, 2002, the Company has approximately $15,000,000 in unused
            federal net operating loss carryforwards, which expire from 2003
            through 2022. The state net operating loss carryforwards, which
            approximate $3,000,000, expire from 2003 through 2007.

      Due to significant changes in ownership in prior years and changes in
            the Company's operations, the amount of operating losses available
            to offset future income taxes may be significantly limited. The
            Company has not yet completed an evaluation of the amount of losses
            that are available for utilization by the Company or a prospective
            merger candidate.


                                      F-19