<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE FISCAL YEAR ENDED MAY 31, 2002

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    FOR THE TRANSITION PERIOD FROM _________ TO ______________

                        COMMISSION FILE NUMBER 001-15591

                            PREMIER CLASSIC ART INC.
                ------------------------------------------------
             (Exact name of registrant as specified in its charter)

         DELAWARE                                            22-3680581
-----------------------------                                ----------
(State or Other Jurisdiction                                (I.R.S.Employer
Incorporation                                          or Identification No.)
of Organization)

                1158 STAFFLER ROAD, BRIDGEWATER, NEW JERSEY 08807
                                 (908) 526-7388
             ------------------------------------------------------
             (Address and telephone number, including area code, of
                    registrant's principal executive office)

     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 period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 YES [X] NO [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of 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. [ ]

     Aggregate market value of voting stock held by non-affiliates as of
September 4, 2002 was approximately $409,553 (based upon the closing sales price
of those shares reported on the National Association of Securities Dealers
Bulletin Board for that day).

     Number of shares of Common Stock outstanding as of September 4, 2002:
     10,012,709.

     DOCUMENTS INCORPORATED BY REFERENCE: NONE




<PAGE>


                            PREMIER CLASSIC ART INC.

                                      INDEX

Part I
           Page

         Item 1.  Business                                                 1

         Item 2.  Properties                                               5

         Item 3.  Legal Proceedings                                        5

         Item 4.  Submission of Matters to Vote of
                  Security Holders                                         6

Part II

         Item 5.  Market for Registrant's Common Equity
                  and Related Stockholders Matters                         6

         Item 6.  Management's Discussion and Analysis
                  of Financial Condition and Results
                  of Operations                                            8

         Item 7.  Financial Statements                                    10

         Item 8.  Changes in and Disagreements with                       11
                  Accountants on Accounting and
                  Financial Disclosure                                    11

Part III

         Item 9.  Directors and Executive Officers;
                  Promoters and Control Persons;
                  Compliance with Section 16(a)
                  of the Exchange Act                                     11

         Item 10. Executive Compensation                                  12

         Item 11. Security Ownership of Certain Beneficial
                  Owners and Management                                   12

         Item 12. Certain Relationships and
                  Related Transactions                                    13
 Part IV

         Item 13. Exhibits and Reports on Form 8-K                      13 - 14

         Signatures                                                       15


         * Page F-1 follows page 10.
<PAGE>

PART I

         All statements contained herein that are not historical facts,
including, but not limited to, statements regarding anticipated growth,
revenues, gross margins and earnings, statements regarding the Company's current
business strategy, the Company's projected sources and uses of cash, and the
Company's expectations, are forward-looking statements in nature and involve a
number of risks and uncertainties. Actual results may differ materially. Among
the factors that could cause results to differ materially are the following: the
availability of sufficient capital to finance the Company's business plans on
terms satisfactory to the Company; changes in marketing distribution, and
capital costs; future acquisitions or strategic partnerships; general business
and economic conditions; and other factors described from time to time in the
Company's reports filed with the Securities and Exchange Commission. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements. These statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak only as of the date
made.


ITEM 1. BUSINESS

General Development of Business
-------------------------------

         Premier Classic Art, Inc. (the "Company") was incorporated as Pet-Con
Industries, Inc. in the State of Delaware on June 14, 1991. The Company
previously manufactured recyclable containers and bottles for sale to private
grocery product manufacturers and food packers. The Company discontinued these
operations in June 1995 and had no operating activities from then until
September 1999.

         On September 2, 1999, the Company hired Charles Trapp as its President
and a director and issued 1,158,845 shares of its common stock. At the same
time, Louis A. Pistilli joined the Company as a director and the Company's
former president resigned. Mr. Pistilli was issued 75,000 shares of the
Company's common stock.

         On September 2, 1999, the Company purchased all of the outstanding
shares of stock of Cool Classic Incorporated, a Nevada corporation, in exchange
for 3,069,788 shares of the Company's common stock. Cool Classic Incorporated is
the owner of approximately 385,000 original, hand-painted animation production
cels, which the Company is attempting to market.








                                        1




<PAGE>


         During December 2001, the Company signed a Memorandum of Understanding
to merge with Parentech, Inc. ("Parentech") of Solana Beach, California.
Parentech paid the Company a transaction fee of $75,000 upon execution of this
memorandum. The payment was made in the form of a six month, 8% loan which will
terminate upon completion of the merger. If the merger is not completed, under
certain circumstances, the Company shall owe Parentech a breakup fee of $75,000,
which amount will be paid in addition to repayment of the loan. On March 1,
2002, the Company agreed to issue 683,108 shares of common stock and 186,000
shares of preferred stock of Premier to certain parties who provided the
transaction fee funding in consideration of Parentech waiving its rights under
certain circumstances to a return of the transaction fee.

         On September 6, 2002, the Board of Directors of the Company and the
Board of Directors of Parentech entered into a new agreement in connection with
a Plan of Merger and Reorganization. The new transaction will be in the form of
a reverse triangular merger, whereby the Company's recently formed wholly-owned
subsidiary Premier Classic Acquisition Corporation will merge with and into
Parentech and the Company will issue one and one-half (1.5) shares of Premier
Classic Art Inc common stock to Parentech Inc stockholders in exchange for each
share of Parentech common stock, Series A preferred stock or Series B preferred
stock they hold.

         In addition, as part of this transaction, each outstanding share of
Premier Classic Acquisition Corporation common stock will by the virtue of the
merger and without any action on the part of the parties, be converted into one
share of Parentech common stock.

         Parentech will be the surviving corporation of the merger and will
become a wholly-owned subsidiary of Premier Classic Art Inc following the
merger.

         Parentech has been in the development stage since its formation and is
primarily engaged in the creation of products that enhance the well being of
infants. On July 7, 2000, Parentech acquired the rights to an FDA registered
sound and motion picture device called "Nature's Cradle", which is an infant
environmental transition sleep system that has shown to enhance infant sleep,
decrease infant crying and promote child development.

         Pursuant to a verbal agreement between the parties, certain
shareholders, including Charles F. Trapp and Giltner B. Stevens, have agreed not
to sell their shares of common stock for a period of six months from the date of
the merger.

Description of Business

         The Company acquired all of the outstanding stock of Cool Classic
Incorporated with its collection of 400,000 animation production cels. The
Company intends to market these cels to the public through its website as well
as through art galleries, department type stores, other retail outlets and
catalogues.




                                        2
<PAGE>

         Pursuant to a Sub-Lease and Assembly Agreement, dated as of September
1999, by and between the Company and Royal Animated Art, Inc., a California
corporation ("Royal"), the Company stores its collection of cels in a warehouse
leased by Royal from a third party. In addition, Royal has agreed to provide
services such as cleaning, sorting, cataloguing, matching with backgrounds,
matting and framing (as requested by the Company) as well as generally preparing
the cels for market. The Company is to pay Royal $1,000 per month for the
warehouse space as well as out of pocket costs for labor and materials plus 15%
of such costs of an estimate of Royal's overhead allocable to the Company's
products for the services rendered to the Company.

         In addition to the marketing and sale of its own collection of cels,
the Company has entered into a Distribution Agreement, dated September 2, 1999,
with Royal. The agreement is for a three year term, subject to renewal. As part
of the agreement, Royal has granted to the Company the non-exclusive right to
purchase and market reproductions of certain animation and comic strip images
and characters, including animation art and comic strip lithographs, which Royal
has or acquires reproduction rights. These rights are subject to any
restrictions or limitations contained in agreements pursuant to which Royal
acquired its rights and to the approval of how many reproductions of each
particular piece of artwork should be sold to the Company. The Company is
required to pay Royal a percentage of Royal's suggested retail price, depending
on whether the Company sells directly to the ultimate consumer (50%) or to
wholesalers, distributors, retailers and/or other middlemen (25%).

         On March 8, 2001, the Company signed an agreement for sale of 80,000
pieces of cel art for 40,000 shares of the buyers Series B Convertible Preferred
Stock, $100 par value. The preferred stock has an 8% cumulative dividend payable
quarterly in cash or in kind at option of the Company and during the first two
years after closing, the stock shall convert into common stock at a 20% discount
and after two year convertible into common stock at 80% of average closing
price. The Company retained a Certified Financial Analyst to render an opinion
on the value of its ownership of 40,000 shares of the buyers Series B
Convertible Preferred Stock. Based on the financial analyst findings, the
Company valued the investment at approximately $750,000. As of May 31, 2001, the
Company shipped 10,550 (13%) of the 80,000 cels and recorded the investment of
$98,906 (13% of $750,000), which is included in other assets on the Company's
balance sheet. As of May 31, 2002, the Company did not fulfill its obligation
under this agreement and therefore recorded a realized loss of $98,906 on this
investment.












                                        3


<PAGE>

Animation Cels
--------------

         The term "cel" is used to describe the basic component of most types of
animation art. In its strictest sense, a cel is a plastic sheet, either
cellulose nitrate or cellulose acetate, on which animated characters are
painted. In practice, the term cel has come to mean that plastic sheet in
combination with the outline and coloring of a character, object or special
effect. Outlines can be either hand-inked or Xerographically transferred to the
sheet of plastic. Those outlines are then filled with color, either by
hand-painting or a serigraphic process, to complete the cel.

         The Company's cel collection includes a combination of 12 field cels
(approximately 12" x 10" in size) and pan cels (approximately 36" x 10" in
size). The cels are selected from and were used in the production of Real
Ghostbusters/Slimer, Ewoks (Star Wars), He-Man, Masters of the Universe, She-Ra
Princess of Power, Bravestar, Flash Gordon, Shelly Duvall's Bedtime Stories,
Beethoven, Back to the Future and others.

Original Production Cels
------------------------

         These cels are hand-painted and have actually been used in the making
of animated films, They can have either Xerographed or hand-inked outlines and
are hand-painted at the studio. Each animation film is made of thousands of
individual hand-painted cels. They are filmed in sequence to create the illusion
of motion. Many original production cels have been either lost or destroyed
through the years, which enhances their value as collectible art. In addition
each cel is a one-of-a-kind piece of art, and this rarity also enhances its
value. Because they were created to make an actual cartoon, each cel is a
component part of a larger movement. Different cels from the same scene may be
more or less desirable depending on a variety of factors such as size, profile,
and expression of the character, any damage to inking or paint and overall
visual appearance.

The Making of Cels
------------------

         The Company does not produce its own cels. However, an understanding of
the production process is helpful toward an understanding of the nature of the
cels and their collectibility.

         For production cels, the process begins when a storyboard is created by
a talented animator, who, with the film director, determines the extent of the
background to be shown, the size of the characters and props to be used in each
scene. The animator makes a sketch from what will become each of approximately
16 frames per foot of film. Next, an outlined ink drawing is made of each of the
sketches. This outline is on a sheet of clear celluloid acetate. Each and every
inked outline is turned over to a painter and, by hand, the brilliant colors
applied with special paints. Once each cel is hand painted and the foregrounds
and backgrounds are complete, the artwork is ready for photography. Using a
multiplane camera, the foreground, animation plane and the background are
meticulously arranged and photographed.




                                        4

<PAGE>

Industry and Competition
------------------------

         The Company believes that collecting of animation production cels is a
rapidly expanding pastime with more and more people every day discovering the
enjoyment and appreciating the hand-craftsmanship of these timeless works of
art. The Company is aware of two major distributors of animation cels, The Walt
Disney Co. (through its Walt Disney Art Classics division) and Time Warner, Inc.
(through its Warner Bros. division) in addition to several distributors of
lesser stature. These distributors have significantly greater resources than the
Company. In addition, many collectors and distributors of cels have established
a presence on the Internet.

Sales and Marketing
-------------------

         Commencing January 11, 2000, the Company opened a website at
www.premierclassicart.com through which it offers for sale a selection of its
animated cels. The Company receives orders from its website, all of which are
paid by credit card. Each order is filled by am employee of the Company and
shipped by regular mail or overnight courier. The Company has chosen IMC On-line
as its internet service provider. It subscribes to this service on a quarterly
basis at a rate of $315 per quarter. The Company is also attempting to market
its cels through art galleries, department stores, other retail outlets and
catalogues. The Company has no existing agreement with any such gallery or
store.

Seasonality
-----------

         The Company's management believes that the demand for animation cels is
not subject to seasonal fluctuations.

Employees
---------

         The Company currently employs one executive.

ITEM 2. PROPERTIES

         On September 1, 1999, the Company entered into a Sublease and Assembly
Agreement with Royal Animated Art, Inc. of California. The agreement provides
for the Company to pay Royal Animated Art, Inc. $1,000 per month for the use of
space in a warehouse facility in order to store the Company's collection of
cels. The agreement also provides for services to be performed by Royal in
connection with the cels and payment by the Company of Royal's costs in
connection with such services plus 15% of its overhead costs.

ITEM 3. LEGAL PROCEEDINGS

         The Company is not party to any material pending legal proceedings.




                                       5
<PAGE>


         However, the Company is currently in default on a note for $375,000 due
September 3, 2001 and is in arrears sixteen months interest totaling
approximately $52,500. The note is collateralized by 200,000 pieces of the
Company's cel art inventory. The note holder is a former director of the Company
and the Company has on going negotiations to extend the due date and resolve the
past due interest. There is no assurance that the Company will be able to secure
an extension and cure the default. It is possible that the lender will foreclose
on its collateral and bring an action on the note.

         The Company is currently in default on a series of convertible notes
totaling $638,700, and is in arrears in interest totaling $704,789. The note is
secured by the assets of the Company and are subordinated to the collateral
securing the $375,000 note.

         The Company is currently in default on a $37,124 demand note for
failure to pay interest of $3,009.

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

         No matters were submitted to a vote of the Company's shareholders
during the fourth quarter of the year ending May 31, 2002.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Market Information

         The Company's securities trade are traded in the over-the-counter
market "pink sheets". The Company's trading symbol is "PMCL". Over-the-counter
market quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commissions and may not represent actual transactions. The following sets
forth the range of high and low bid information for the quarterly periods as
reported on America Online:




                                         High           Low
       Year Ended May 31, 2001
                   1st Quarter           2.00           0.45
                   2nd Quarter         0.3125          0.125
                   3rd Quarter           1.22         0.1875
                   4th Quarter           0.25         0.0625

       Year Ended May 31, 2002
                   1st Quarter           0.51           0.06
                   2nd Quarter           0.50           0.10
                   3rd Quarter           0.80           0.24
                   4th Quarter           0.50           0.24







                                        6
<PAGE>


         The Company has 10,012,709 shares of common stock outstanding, but, of
these shares, only 3,108,662 shares are freely tradable. All of the remaining
shares of common stock are considered "restricted securities" and in the future,
may be sold only in compliance with Rule 144 or in an exempt transaction under
the Securities Act of 1933 (the "Act") unless registered under the Act.

Recent Sales of Unregistered Securities

         The following paragraphs set forth certain information with respect to
all securities sold by the Company within the past year without registration
under the Securities Act of 1933, as amended (the "Securities Act"). The
information includes the names of the purchasers, the date of issuance, the
title and number of securities sold and the consideration received by the
Company for the issuance of these shares.

         In September 1999, the Company issued to Charles F. Trapp 1,158,845
shares of common stock at $.001 per share in exchange for services rendered.

         In September 1999, the Company issued to Mr. Louis Pistilli 125,000
shares in the aggregate (75,000 at $.001 per share for services rendered and
50,000 at $.10 per share pursuant to a 504 offering.

         In September 1999, the Company issued 3,069,788 shares of common stock
to Joe Cool Collectibles, Inc. in exchange for all the outstanding stock of Cool
Classics, Inc.

         In September 1999, the Company sold 2,250,000 shares of common stock at
$0.10 per share in connection with the Company's 504 financing.

         In March 2001, the Company issued 1,000,000 shares of common stock at
$0.20 per share in exchange for consulting services rendered.

         In November 2001, the Company issued 664,905 shares of common stock in
connection with a conversion of $25,000 convertible note.

         In May 2002, the Company issued 683,108 shares of common stock and
186,000 shares of preferred stock as payment for $75,000 of the Company's notes
payable.

(b) Holders

         As of August 30, 2002, the number of holders of record of common stock,
excluding the number of beneficial owners whose securities are held in street
name was approximately 368.

(c) Dividend Policy

         The Company is prohibited from paying cash dividends on the common
stock until the preferred stock is converted into common stock or all preferred
dividends in arrears are brought current.

                                        7
<PAGE>


         However, even assuming its obligation on its preferred stock are
satisfied, the Company does not anticipate paying any cash dividends on its
common stock in the foreseeable future and it intends to retain its earnings to
finance the expansion of its business. Thereafter, the declaration of dividends
will be determined by the Board of Directors in light of conditions then
existing, including, without limitation, the Company's financial condition,
capital requirements and business condition.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

Liquidity and Capital Resources
-------------------------------

         The Company does not have adequate cash reserves to meet its future
cash requirements. The Company is seeking to raise additional working capital
through debt or equity financing. The Company's ability to continue as a going
concern will depend upon successful completion of such financing and on its
ability to market its inventory. The Company does not expect to have to purchase
any property or equipment over the next year that cannot be financed in the
ordinary course of business.

         On September 3, 1999, the Company issued a $775,000 principle 10 1/2%
convertible note due September 3, 2000 (the "Note"). In connection with the
execution of this Note, the Company sold the holder 100,000 shares of the
Company's common stock for $.001 per share (which was below fair market value)
and issued him a warrant to purchase 400,000 shares of the Company's common
stock at $1.00 per share. The Note is collateralized with 200,000 of the
Company's cells. On August 18, 2000, the Company signed an extension agreement
to extend the due date of the Note until September 3, 2001 (the "Extension
Agreement"). Under this agreement, the Company was required to make a principal
payment on the Note of $300,000 on or before September 3, 2000 and $100,000 on
or before October 3, 2000. The Company made the $400,000 of principal payments
and extended the note to March 4, 2002 contingent upon a $90,000 payment due
November 3, 2001. The Company has not made this payment and is currently in
default of this note. The $375,000 balance remaining on the Note is convertible
into 120,967 shares of the Company's common stock, at the option of the holder,
at a conversion price of $3.10 per share. In September 2001, the Company
increased the number of shares purchasable upon exercise of the warrant from
400,000 to 500,000 and changed the exercise price of the warrant from $1.00 per
share to $0.50 per share.

         During the year ended May 31, 2001, the Company issued $658,700 of 12%
convertible notes. The note is convertible into common stock at $0.125 per
share. Interest on the note was paid with additional notes. Proceeds from this
financing was used to reduce the $775,000 note due September 3, 2000 by $400,000
and the balance for accounts payable and operating expenses.

         The Notes are convertible into 5,269,600 shares of the Company's common
stock at $.125 per share. If the Company sells its common stock for a price
below $.125 per share both the conversion price and the warrant price are
reduced to that lower price. There is no assurance that the Company will be able
to fulfill the terms of this agreement.


                                        8
<PAGE>

         During December 2001, the Company signed a Memorandum of Understanding
to merge with Parentech, Inc. ("Parentech") of Solana Beach, California.
Parentech paid the Company a transaction fee of $75,000 upon execution of this
memorandum. The payment was made in the form of a six month, 8% loan which will
terminate upon completion of the merger. If the merger is not completed, under
certain circumstances, the Company shall owe Parentech a breakup fee of $75,000,
which amount will be paid in addition to repayment of the loan. On March 1,
2002, the Company agreed to issue 683,108 shares of common stock and 186,000
shares of preferred stock of Premier to certain parties who provided the
transaction fee funding in consideration of Parentech waiving its rights under
certain circumstances to a return of the transaction fee.

         On September 6, 2002, the Board of Directors of the Company and the
Board of Directors of Parentech entered into a new agreement in connection with
a Plan of Merger and Reorganization. The new transaction will be in the form of
a reverse triangular merger, whereby the Company's recently formed wholly-owned
subsidiary Premier Classic Acquisition Corporation will merge with and into
Parentech and the Company will issue one and one-half (1.5) shares of Premier
Classic Art Inc common stock to Parentech Inc stockholders in exchange for each
share of Parentech common stock, Series A preferred stock or Series B preferred
stock they hold.

         In addition, as part of this transaction, each outstanding share of
Premier Classic Acquisition Corporation common stock will by the virtue of the
merger and without any action on the part of the parties, be converted into one
share of Parentech common stock.

         Parentech will be the surviving corporation of the merger and will
become a wholly-owned subsidiary of Premier Classic Art Inc following the
merger.

         Parentech has been in the development stage since its formation and is
primarily engaged in the creation of products that enhance the well being of
infants. On July 7, 2000, Parentech acquired the rights to an FDA registered
sound and motion picture device called "Nature's Cradle", which is an infant
environmental transition sleep system that has shown to enhance infant sleep,
decrease infant crying and promote child development.


Plan of Operation
-----------------

         The Company plans to continue marketing and selling its collection of
cels over the internet and through art galleries department stores, other retail
outlets and catalogues. The Company currently has no agreement with any such
entity. The Company anticipates that it will take more than five years for it to
liquidate the collection so as to maximize its value and to take advantage of
opportunities to sell pieces when possible. The Company has received only
limited revenues from sales of its cels to date. Royal, in accordance with its
agreement with the Company provides the necessary artistic staff to process and
prepare its cels for presentation to the public. The Company has 35,000 cels
ready for presentation and distribution.





                                        9
<PAGE>

Year Ended May 31, 2002 compared to May 31, 2001

Sales

Sales decreased from $100,598 for the year ended May 31, 2001 to $337 for the
year ended May 31, 2002. The Company attributes the decrease to the Company's
inability to market its inventory to the general public.

Cost of Sales

Cost of sales increased from $57,887 for the year ended May 31, 2001 to $258,865
for the year ended May 31, 2002. The Company attributes the increase the Company
setting up a reserve on inventory for the year ended May 31, 2002.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased from $699,128 for the
year ended May 31, 2001 to $364,136 for the year ended May 31, 2002. The Company
attributes the decrease primarily to sales and marketing fees in connection with
the increased sales in 2001.

Interest Expense

Interest expense increased from $536,278 for the year ended May 31, 2001 to
$1,216,135 for the year ended May 31, 2002. The increase is primarily attributed
to non-cash interest in connection with the issuance of warrants relating to the
convertible notes.

Loss on Sale of Marketable Securities

Loss on sale of marketable securities increased from $44,619 for the year ended
May 31, 2001 to $98,906 for the year ended May 31, 2002. The Company attributes
the increase to the loss recognized on the Company's investment for the
Company's failure to fulfill its obligations under the terms of the agreement.

ITEM 7. FINANCIAL STATEMENTS


                                       10

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
Premier Classic Art, Inc.


We have audited the accompanying consolidated balance sheets of Premier Classic
Art, Inc.(the "Company") as of May 31, 2002, and 2001, and the related
consolidated statements of operations, stockholders' deficiency, and cash flows
for each of the three years in the period ended May 31, 2002. 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 audit.

         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 audit 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 provides a
reasonable basis for our opinion.

In our opinion, such financial statements referred to above present fairly, in
all material respects, the financial position of Premier Classic Art, Inc. and
its subsidiary at May 31, 2002 and 2001 and the results of their operations and
their cash flows for each of the years in the period ended May 31, 2002, in
conformity with accounting principles generally accepted in the United States of
America.








                                       F-1


<PAGE>




The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As more fully explained in Note 1 of Notes to
consolidated Financial Statements, the Company needs to obtain additional
financing and sell its inventory to liquidate its debts and support the
Company's overhead. The Company is currently in default of the $375,000 note
payable which was due September 3, 2001. These uncertainties raise 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
these uncertainties.



WIENER, GOODMAN & COMPANY, P.C.
Certified Public Accountants
Eatontown, New Jersey


September 6, 2002





                                       F-2



<PAGE>

<TABLE>
<CAPTION>

                                         PREMIER CLASSIC ART, INC. & SUBSIDIARY
                                               CONSOLIDATED BALANCE SHEETS


                                                         ASSETS

                                                                            May 31, 2002            May 31, 2001
                                                                         -----------------        ----------------
<S>                                                                      <C>                       <C>
Current Assets:
     Cash                                                                    $     2,480           $     7,150
     Inventories (net of reserve of $258,865)                                          -               258,865
     Prepaid expenses - current                                                   41,667               166,667
                                                                             -----------           -----------
         Total Current Assets                                                     44,147               432,682

Marketable securities                                                                  -                98,906
Other assets                                                                           -                41,666
                                                                             -----------           -----------

         TOTAL ASSETS                                                        $    44,147           $   573,254
                                                                             ===========           ===========

                                        LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
     Notes payable                                                           $    37,124            $        -
     Convertible notes payable                                                 1,013,700             1,033,700
     Accured interest                                                            550,538                92,514
     Accrued payroll                                                             124,633                55,000
     Accrued professional fees                                                   140,179                84,889
     Accrued expenses                                                             47,838                73,904
                                                                             -----------           -----------
         Total Current Liabilities                                             1,914,012             1,340,007
                                                                             -----------           -----------
Commitments and Contingencies

Stockholders' Deficiency:
     Series A cumulative convertible
         preferred stock - 8% cumulative,
         par value $.002 per share, authorized
         10,000,000 shares; outstanding
         252,000 and 136,000 shares                                                  504                   272
     Common stock - par value $.001 per share,
         authorized 50,000,000 shares; outstanding
         10,012,709 and 8,648,946 shares                                          10,013                 8,649
     Additional paid-in capital                                                3,514,759             2,658,373
     Deficit                                                                  (5,395,141)           (3,434,047)
                                                                             -----------           -----------
         Total Stockholders' Deficiency                                       (1,869,865)             (766,753)
                                                                             -----------           -----------

         TOTAL LIABILITIES AND
            STOCKHOLDERS' DEFICIENCY                                         $    44,147           $   573,254
                                                                             ===========           ===========

</TABLE>

                       See notes to financial statements.

                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                                         PREMIER CLASSIC ART, INC. & SUBSIDIARY
                                          CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                                Year Ended
                                                                                   May 31,
                                                                 ---------------------------------------------
                                                                  2002               2001                2000
                                                                 ------             ------              ------
<S>                                                               <C>              <C>                 <C>
Sales                                                           $      337        $   100,598        $   135,200
                                                                ----------        -----------        -----------
Cost and Expenses:
      Cost of sales                                                258,865             57,887             20,259
      Selling, general
       and administrative                                          387,525            699,128          1,079,854
                                                                ----------        -----------        -----------
                                                                   646,390            757,015          1,100,113
                                                                ----------        -----------        -----------

Loss from operations                                              (646,053)          (656,417)          (964,913)

Interest expense - net                                           1,216,135            536,278            272,798

Write-off/loss on sale of marketable securities                     98,906             44,619
                                                                ----------        -----------        -----------
      Total other expenses                                       1,315,041            580,897            272,798
                                                                ----------        -----------        -----------

Loss before income tax provision
   and extraordinary gain                                       (1,961,094)        (1,237,314)        (1,237,711)

Income tax benefit                                                       -                  -           (127,000)
                                                                ----------        -----------        -----------

Loss before extraordinary gain                                  (1,961,094)        (1,237,314)        (1,110,711)

Extraordinary gain on
  extinguishment of debt (net
  of income tax of $127,000)                                             -                  -            246,974
                                                                ----------        -----------        -----------

Net (loss)                                                     $(1,961,094)       $(1,237,314)       $  (863,737)
                                                               ===========        ===========        ===========

Net (loss) per common
  share-basic and diluted                                      $     (0.21)       $     (0.16)       $     (0.20)

Extraordinary gain on
  extinguishment of debt                                                 -                  -               0.04
                                                                ----------        -----------        -----------

Net (loss) per common
  share-basic and diluted                                       $    (0.21)       $     (0.16)       $     (0.16)
                                                                ==========        ===========        ===========

Weighted average of common
  shares outstanding - basic
  and diluted                                                    9,184,738          7,816,069          5,549,875
                                                                ==========        ===========        ===========

</TABLE>

                       See notes to financial statements.

                                      F-4

<PAGE>

<TABLE>
<CAPTION>
                                         PREMIER CLASSIC ART, INC. & SUBSIDIARY
                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                                                                                                                 Series A
                                                                                                              Preferred Stock
                                                                                       Net unrealized      ----------------------
                                                          Comprehensive               (loss) on market-      Shares         Par
                                                Total         (loss)       Deficit     able securities     Outstanding      Value
                                               -------   ---------------  ---------   ------------------   ------------    ------
<S>                                           <C>              <C>           <C>         <C>                 <C>            <C>
Balance June 1, 1997                        $ (456,871)                   $(1,286,196)    $       -           256,800      $  514
  Retroactive effect of 1-for-50
   reverse stock split effective
   September 1, 1999
  Net (loss)                                   (23,400)                       (23,400)
                                            ----------       -----------   ----------     ---------          --------      ------
Balance, May 31, 1998                         (480,271)                    (1,309,596)                        256,800         514
  Capitalized debt                              88,630                              -                               -
  Net (loss)                                   (23,400)                       (23,400)
                                            ----------       -----------   ----------     ---------          --------      ------
Balance, May 31, 1999                         (415,041)                    (1,332,996)                        256,800         514
  Sale of common stock (at $.12
   per share)                                   15,000
  Issuance of stock to repay accounts
   payable (valued at $.10  per share)              93
  Issuance of stock to repay debt
   and accrued interest (valued at
   $.10 per share)                                 236
  Conversion of preferred stock
   to common stock                                   -                                                        (40,000)        (80)
  Capitalized debt                              38,319
  Issuance of common stock for
   services (valued at $.10 per share)         209,362
  Issuance of common stock in
   connection with acquisition
   (valued at $.10 per share)                  306,879
  Issuance of stock warrants for
   services and in connection with
   financing                                   260,000
  Issuance of common stock for
   services (valued at $.10 per share)           1,400
  Sale of common stock (at $.10 per
   share)                                      223,600
  Conversion of preferred stock
   to common stock                                                                                            (64,000)       (128)
  Issuance of common stock to repay
   debt and accrued interest (valued
   at $.10 per share)                              400
  Conversion of preferred stock to
   common stock                                      -                                                        (16,800)        (34)
  Issuance of common stock for
   services (valued at $5.00 per share)          5,000
  Net unrealized loss on marketable
   securities                                  (44,619)     $    (44,619)                   (44,619)
  Net (loss)                                  (863,737)         (863,737)    (863,737)
                                                            ------------
  Comprehensive loss                                        $   (908,356)
                                            ----------      ============   ----------     ---------         ---------      ------
Balance, May 31, 2000                         (263,108)                    (2,196,733)      (44,619)          136,000         272

</TABLE>

<PAGE>



[RESTUBBED TABLE]

<TABLE>
<CAPTION>
                                                Common Stock
                                         --------------------------         Additional
                                           Shares              Par            Paid-In
                                         Outstanding          Value           Capital
                                         -----------         -------       ------------
<S>                                        <C>               <C>            <C>
Balance June 1, 1997                       3,770,521        $   3,770        $  825,041
  Retroactive effect of 1-for-50
   reverse stock split effective
   September 1, 1999                      (3,695,111)          (3,695)            3,695
  Net (loss)
                                          ----------        ---------        ----------
Balance, May 31, 1998                         75,410               75           828,736
  Capitalized debt                                 -                             88,630
  Net (loss)                                       -                                  -
                                          ----------        ---------        ----------
Balance, May 31, 1999                         75,410               75           917,366
  Sale of common stock (at $.12
   per share)                                124,590              125            14,875
  Issuance of stock to repay accounts
   payable (valued at $.10  per share)           925                1                92
  Issuance of stock to repay debt
   and accrued interest (valued at
   $.10 per share)                             2,360                2               234
  Conversion of preferred stock
   to common stock                             9,000                9                71
  Capitalized debt                                                               38,319
  Issuance of common stock for
   services (valued at $.10 per share)     2,093,618            2,094           207,268
  Issuance of common stock in
   connection with acquisition
   (valued at $.10 per share)              3,069,788            3,070           303,809
  Issuance of stock warrants for
   services and in connection with
   financing                                                                    260,000
  Issuance of common stock for
   services (valued at $.10 per share)        14,000               14             1,386
  Sale of common stock (at $.10 per
   share)                                  2,236,000            2,236           221,364
  Conversion of preferred stock
   to common stock                            14,475               14               114
  Issuance of common stock to repay
   debt and accrued interest (valued
   at $.10 per share)                          4,000                4               396
  Conversion of preferred stock to
   common stock                                3,780                4                30
  Issuance of common stock for
   services (valued at $5.00 per share)        1,000                1             4,999
  Net unrealized loss on marketable
   securities
  Net (loss)

  Comprehensive loss
                                          ----------        ---------        ----------
Balance, May 31, 2000                      7,648,946            7,649         1,970,323

</TABLE>
                       See notes to financial statements.

                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                                         PREMIER CLASSIC ART, INC. & SUBSIDIARY
                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY


                                                                                                                   Series A
                                                                                                                Preferred Stock
                                                                                         Net unrealized      ----------------------
                                                           Comprehensive                (loss) on market-      Shares         Par
                                                 Total         (loss)        Deficit     able securities     Outstanding      Value
                                                -------   ---------------   ---------   ------------------   ------------    ------
<S>                                            <C>              <C>           <C>         <C>                 <C>            <C>
Balance, May 31, 2000                           (263,108)                   (2,196,733)       (44,619)          136,000         272
  Contribution of capital                         28,750
  Issuance of common stock for services
    (valued at $.20 per share)                   200,000
  Issuance of stock warrants in
      connection with convertible notes          326,300
  Issuance of stock warrants for
      services in connection with financing      134,000
  Realized loss                                   44,619    $    44,619                         44,619
  Net (loss)                                  (1,237,314)    (1,237,314)    (1,237,314)              -                -           -
                                                            -----------
  Comprehensive loss                                        $(1,192,695)
                                              ----------    ===========     ----------       ---------         --------      ------
Balance, May 31, 2001                           (766,753)                   (3,434,047)              -          136,000         272
  Issuance of stock warrants in
     connection with convertible notes
     (valued at varying amounts from $0.06 to
         $0.71 per share)                        746,620
  Conversion of preferred stock to
     common stock                                      -                                                        (70,000)       (140)
  Conversion of convertible debt to common
     stock                                        25,000
  Exercise of cashless warrants in connection
     with conversion of convertible debt          11,362
  Conversion of notes payable to
     common stock and preferred stock             75,000                                                        186,000         372
  Net (loss)                                  (1,961,094)   $(1,961,094)    (1,961,094)
                                                            -----------
  Comprehensive loss                                        $(1,961,094)
                                              ----------    ===========     ----------       ---------         --------      ------
 Balance, May 31, 2002                       $(1,869,865)                  $(5,395,141)      $       -          252,000      $  504
                                              ==========                    ==========       =========         ========      ======
</TABLE>

[RESTUBBED TABLE]

<TABLE>
<CAPTION>
                                                     Common Stock
                                              --------------------------          Additional
                                                 Shares              Par            Paid-In
                                               Outstanding          Value           Capital
                                               -----------         -------       ------------
<S>                                             <C>               <C>            <C>
Balance, May 31, 2000                          7,648,946             7,649         1,970,323
  Contribution of capital                                                             28,750
  Issuance of common stock for services
    (valued at $.20 per share)                 1,000,000             1,000           199,000
  Issuance of stock warrants in
      connection with convertible notes
  Issuance of stock warrants for
      services in connection with financing                                          326,300
  Realized loss                                                                      134,000
  Net (loss)                                           -                 -                 -

  Comprehensive loss
                                              ----------         ---------       -----------
Balance, May 31, 2001                          8,648,946             8,649         2,658,373
  Issuance of stock warrants in
     connection with convertible notes
     (valued at varying amounts from $0.06
         to $0.71 per share)                                                         746,620
  Conversion of preferred stock to
     common stock                                 15,750                16               124
  Conversion of convertible debt to common
     stock                                       290,896               291            24,709
  Exercise of cashless warrants in connection
     with conversion of convertible debt         374,009               374            10,988
  Conversion of notes payable to
     common stock and preferred stock            683,108               683            73,945
  Net (loss)

  Comprehensive loss
                                              ----------         ---------       -----------
 Balance, May 31, 2002                        10,012,709         $  10,013       $ 3,514,759
                                              ==========         =========       ===========

</TABLE>

                       See notes to financial statements.

                                      F-6

<PAGE>

<TABLE>
<CAPTION>
                                         PREMIER CLASSIC ART, INC. & SUBSIDIARY
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                    Year Ended
                                                                                                       May 31,
                                                                                     -------------------------------------------
                                                                                       2002             2001              2000
                                                                                     --------         --------          --------
<S>                                                                                   <C>               <C>              <C>
Cash flows from operating activities:
     Net (loss)                                                                    $ (1,961,094)    $ (1,237,314)      $  (863,737)

        Adjustments to reconcile net (loss) to cash provided by operating
         activities:
           Depreciation and amortization                                                      -                -             3,387
           Extraordinary gain on extinguishment
            of debt                                                                           -                -          (373,974)
           Non-cash interest expense on warrants issued                                 746,620          326,300                 -
           Non-cash compensation expense                                                      -          200,000           215,762
           Reserve on inventories                                                       258,865
           Other non-cash items                                                               -          134,000           260,000
           Write off / loss on sale of marketable securities                             98,906           44,619
           Non-cash sales                                                                     -          (98,906)                -
        Changes in operating assets and liabilities:
           Decrease (increase) in prepaid expenses
            and other assets                                                            166,666          166,667          (375,000)
           Decrease in inventories                                                            -           36,432            11,682
           Increase in accrued expenses                                                 556,243          119,494           187,995
                                                                                   ------------     ------------      ------------
           Net Cash Used in Operating
            Activities                                                                 (133,794)        (308,708)         (933,885)
                                                                                   ------------     ------------      ------------
Cash flows from investing activities:
     Purchase of marketable securities                                                        -                -           (46,807)
     Sale of marketable securities                                                                        28,750                 -
                                                                                   ------------     ------------      ------------
           Net Cash Provided by (Used in)
            Investing Activities                                                              -           28,750           (46,807)
                                                                                   ------------     ------------      ------------
Cash flows from financing activities:
     Proceeds from sale of common stock                                                       -                -           238,600
     Proceeds from short term borrowings                                                129,124          658,700           775,000
     Payments of short term borrowings                                                        -         (400,000)           (4,500)
                                                                                   ------------     ------------      ------------
           Net Cash Provided by Financing
            Activities                                                                  129,124          258,700         1,009,100
                                                                                   ------------     ------------      ------------

Net (decrease) increase in cash                                                          (4,670)         (21,258)           28,408

Cash - beginning of year                                                                  7,150           28,408                 -
                                                                                   ------------     ------------      ------------

Cash - end of year                                                                 $      2,480     $      7,150      $     28,408
                                                                                   ============     ============      ============

Supplemental disclosure of non-cash financing activities:
     Capital contribution to forgive debt                                          $          -     $          -      $     38,319
                                                                                   ============     ============      ============
Non-cash investing activities:
     Unrealized loss on marketable
      securities                                                                   $          -     $    (44,649)     $     44,619
                                                                                   ============     ============      ============

     Common stock issued for inventory                                             $          -     $          -      $    306,979
                                                                                   ============     ============      ============
     Common stock issued for debt                                                  $          -     $    200,000      $        729
                                                                                   ============     ============      ============
     Conversion of notes payable to common and
        preferred stock                                                            $    111,362     $          -      $          -
                                                                                   ============     ============      ============

</TABLE>

                       See notes to financial statements.

                                      F-7
<PAGE>

                     PREMIER CLASSIC ART, INC. & SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization
     ------------

     Premier Classic Art, Inc. and its subsidiary (the "Company") formerly
     Pet-Con Industries, Inc. discontinued operations in June 1995. On September
     1, 1999 the Company changed its name and is currently engaged in the
     marketing of original, hand-painted production animation cels through a
     variety of outlets throughout the United States.

     Basis of Presentation
     ---------------------

     The accompanying financial statements have been prepared on a going concern
     basis, which contemplates the realization of assets and the satisfaction of
     liabilities in the normal course of business.

     The Company's ability to continue as a going concern is dependent upon its
     ability to obtain needed working capital through additional equity and/or
     debt financing and its ability to market its inventory. Management is
     actively seeking additional capital to liquidate its current obligations.
     There is no assurance that additional capital will be obtained or the
     Company will be able to sell its current inventory. The Company's $375,000
     note payable, which was due on September 3, 2001, was extended until March
     4, 2002 contingent on a $90,000 payment, which was due November 3, 2001.
     The Company has not made this payment and is currently in default on this
     note. The Company has not paid the interest on this note, which is due
     monthly, and currently owes approximately $39,375 of additional interest
     payments which are included in accrued expenses.

     The Company is also accruing a 3% penalty per month payable in units of
     additional convertible notes and A and B warrants for its $638,700
     convertible notes which are over 180 days old. As of May 31, 2002, the
     Company was assessed $317,483 in interest expense for this penalty. The
     Company does not have adequate cash reserves to fulfill these requirements
     and there is no assurance that the terms of this agreement can be met.
     These uncertainties raise substantial doubt about the ability of the
     Company to continue as a going concern.

     During December 2001, the Company signed a Memorandum of Understanding to
     merge with Parentech, Inc. ("Parentech") of Solana Beach, California.
     Parentech paid the Company a transaction fee of $75,000 upon execution of
     this memorandum. The payment was made in the form of a six month, 8% loan
     which will terminate upon completion of the merger. If the merger is not
     completed, under certain circumstances, the Company shall owe Parentech a
     breakup fee of $75,000, which amount will be paid in addition to repayment
     of the loan. On March 1, 2002, the Company agreed to issue 683,108 shares
     of common stock and 186,000 shares of preferred stock of Premier to certain
     parties who provided the transaction fee funding in consideration of
     Parentech waiving its rights under certain circumstances to a return of the
     transaction fee.






                                       F-8
<PAGE>

     On September 6, 2002, the Board of Directors of the Company and Board of
     Directors of Parentech entered into a new agreement in connection with a
     Plan of Merger and Reorganization. The new transaction will be in the form
     of a reverse triangular merger, whereby the Company's recently formed
     wholly-owned subsidiary Premier Classic Acquisition Corporation will merge
     with and into Parentech and the Company will issue one and one-half (1.5)
     shares of Premier Classic Art Inc common stock to Parentech Inc
     stockholders in exchange for each share of Parentech common stock, Series A
     preferred stock or Series B preferred stock they hold.

     In addition, as part of this transaction, each outstanding share of Premier
     Classic Acquisition Corporation common stock will by the virtue of the
     merger and without any action on the part of the parties, be converted into
     one share of Parentech common stock.

     Parentech will be the surviving corporation of the merger and will become a
     wholly-owned subsidiary of Premier Classic Art Inc following the merger.

     Parentech has been in the development stage since its formation and is
     primarily engaged in the creation of products that enhance the well being
     of infants. On July 7, 2000, Parentech acquired the rights to an FDA
     registered sound and motion picture device called "Nature's Cradle", which
     is an infant environmental transition sleep system that has shown to
     enhance infant sleep, decrease infant crying and promote child development.

     Pursuant to a verbal agreement between the parties, certain shareholders,
     including Charles F. Trapp and Giltner B. Stevens, have agreed not to sell
     their shares of common stock for a period of six months from the date of
     the merger.

     The financial statements do not include any adjustments relative to the
     recoverability and classification of recorded asset amounts and
     classification of liabilities that might be necessary should the Company be
     unable to continue as a going concern.

     Principles of Consolidation
     ---------------------------

     The consolidated financial statements include the accounts of the Company
     and its wholly-owned subsidiary. All intercompany transactions and balances
     have been eliminated.

     Use of Estimates
     ----------------

     The preparation of the financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates.






                                       F-9
<PAGE>



     Marketable Securities
     ---------------------

     The Company classifies its investment in equity securities as "available
     for sale", and accordingly, reflects unrealized losses, net of deferred
     taxes, as a separate component of stockholders' (deficiency).

     The fair values of marketable securities are estimated based on quoted
     market prices. Realized gains or losses from the sales of marketable
     securities are based on the specific identification method.

     Concentration of Credit Risk
     ----------------------------

     Sales to one major customer accounted for approximately 98% and 63% of the
     net sales for the years ended May 31, 2001 and 2000, respectively.

     Reverse Stock Split
     -------------------

     Effective September 1, 1999 the Board of Directors approved a one-for-fifty
     reverse stock split of its common stock. All references in the accompanying
     financial statements to the number of shares and per share amounts have
     been retroactively restated to reflect this transaction.

     Prepaid Expenses
     ----------------

     Prepaid expenses consist primarily of a three year consulting agreement
     expiring September 2, 2002 in the amount of $500,000 which was paid in cash
     by the Company in September 1999. Consulting expense charged to operations
     for the years ended May 31, 2002, 2001 and 2000 were $166,666, $166,666 and
     $166,667, respectively.

     Evaluation of Long-lived Assets
     -------------------------------

     Long-lived assets are assessed for recoverability on an ongoing basis. In
     evaluating the fair value and future benefits of long-lived assets their
     carrying value would be reduced by the excess, if any, of the long-lived
     asset over management's estimate of the anticipated undiscounted future net
     cash flows of the related long-lived asset. As of May 31, 2002, management
     concluded that no impairment exists.

     Inventories
     -----------

     Inventories, consisting of animated cels are stated at the lower of cost
     (first-in, first-out) or market.

     Revenue Recognition
     -------------------

     Revenue is recognized upon shipment of merchandise after the price to the
     buyer is fixed and determinable and title passes to customers and
     collectibility of the sales price is reasonably assured. The Company sold
     inventory for stock and valued the revenue on a pro-rata basis based on the
     value of the stock received as determined by a Certified Financial Analyst
     hired by the Company.

                                      F-10
<PAGE>



     Stock-Based Compensation
     ------------------------

     The Company accounts for employee stock options and warrants in accordance
     with the provisions of Accounting Principles Board Opinion No. 25,
     "Accounting for Stock Issued to Employees". Accordingly, stock options and
     warrants are recorded using the intrinsic value method. The Company has
     adopted the provisions of Statement of Financial Accounting Standards No.
     123, "Accounting for Stock Based Compensation." The Company recognizes
     compensation expense for grants of stock, stock options and warrants and
     other equity instruments to employees and non-employees based on fair
     value.

     Loss Per Common Share
     ---------------------

     Basic loss per common share is computed by dividing net loss by the
     weighted average number of common shares outstanding during the year.
     Diluted earnings per common share are computed by dividing net earnings by
     the weighted average number of common and potential common shares during
     the year. Potential common shares are excluded from the loss per share
     calculation, because the effect would be antidilutive. Potential common
     shares relate to the preferred stock that is convertible into common stock,
     convertible debt and outstanding warrants. The number of potential common
     shares outstanding were 37,694,734, 24,992,010 and 947,946 as of May 31,
     2002, 2001, and 2000 respectively.

     Fair Value of Financial Instruments
     -----------------------------------

     At May 31, 2002, the fair values of cash, other current assets, accounts
     payable, short-term debt, accrued interest and other accrued liabilities
     approximated their carrying values because of the short-term nature of
     these instruments.

     New Financial Accounting Standards
     ----------------------------------

     Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
     Derivative Instruments and Hedging Activities, is effective for all fiscal
     years beginning after June 15, 2000. SFAS 133, as amended, establishes
     accounting and reporting standards for derivative instruments, including
     certain derivative instruments embedded in other contracts, and for hedging
     activities. Under SFAS 133, certain contracts that were not formerly
     considered derivatives may now meet the definition of a derivative. The
     Company adopted SFAS 133 effective June 1, 2001. The adoption of SFAS 133
     has not had a significant impact on the consolidated financial position,
     results of operations, or cash flows of the Company.

     On June 29, 2001, the Financial Accounting Standards Board (FASB) issued
     SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and
     Intangible Assets". Major provisions of these Statements are as follows:
     all business combinations initiated after June 30, 2001 must use the
     purchase method of accounting; the pooling of interest method of accounting
     is prohibited; goodwill and intangible assets with indefinite lives are not
     amortized but are tested for impairment annually, except in certain
     circumstances, and whenever there is an impairment indicator; all acquired
     goodwill must be assigned to reporting units for purposes of impairment
     testing; effective January 1, 2002, goodwill will no longer be subject to
     amortization. The adoption of SFAS No. 141 and No. 142 will not have a
     significant impact on the consolidated financial position, results of
     operations or cash flows of the Company.

                                      F-11
<PAGE>



     In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
     Obligations". SFAS No. 143 addresses financial accounting and reporting for
     obligations and costs associated with the retirement of tangible long-lived
     assets. The Company is required to implement SFAS No. 143 on June 1, 2003;
     management does not expect its adoption to have a material impact on the
     Company's results of operations or financial position.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
     Impairment or Disposal of Long-Lived Assets", effective for fiscal years
     beginning after December 15, 2001. Under SFAS No. 144 assets held for sale
     will be included in discontinued operations if the operations and cash
     flows will be or have been eliminated from the ongoing operations of the
     entity and the entity will not have any significant continuing involvement
     in the operations of the component. The Company is planning to adopt SFAS
     No. 144 in its year beginning June 1, 2002. The Company believes the
     adoption of SFAS No. 144 will not have a material impact on the Company's
     results of operations or financial position.

     In April 2002, the FASB issued SFAS No. 145 "Rescission of FASB Statements
     No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
     Corrections". This statement eliminates the automatic classification of
     gain or loss on extinguishment of debt as an extraordinary item of income
     and requires that such gain or loss be evaluated for extraordinary
     classification under the criteria of Accounting Principles Board No. 30
     "Reporting Results of Operations". This statement also requires
     sales-leaseback accounting for certain lease modifications that have
     economic effects that are similar to sales-leaseback transactions, and
     makes various other technical corrections to existing pronouncements. This
     statement will be effective for the Company for the year ending December
     31, 2003. The adoption of this statement will not have a material effect on
     the Company's results of operations or financial position.

     In July 2002, the Financial Accounting Standards Board issued SFAS No. 146,
     "Accounting for Costs Associated with Exit or Disposal Activities." SFAS
     No. 146 will supersede Emerging Issues Task Force Issue No. 94-3,
     "Liability Recognition for Certain Employee Termination Benefits and Other
     Costs to Exit an Activity (including Certain Costs Incurred in a
     Restructuring)." SFAS No. 146 requires that costs associated with an exit
     or disposal plan be recognized when incurred rather than at the date of a
     commitment to an exit or disposal plan. SFAS No. 146 is to be applied
     prospectively to exit or disposal activities initiated after December 31,
     2002.

2. ACQUISITION

     On September 3, 1999, the Company acquired Cool Classic, Inc., a subsidiary
     of Joe Cool Collectibles, Inc. for 3,069,788 shares of the Company's common
     stock. Cool Classic, Inc. owned inventory of original, hand-painted
     production animation cels.

     The acquired inventory was accounted for as a non-monetary transaction in
     accordance with Accounting Principles Board Opinion No. 29, "Accounting for
     Non-Monetary Transactions" (APB No. 29). The Company recorded the inventory
     valued at $306,979, which represents the fair value ($.10 per share) of the
     stock issued to acquire Cool Classic, Inc. Pursuant to the agreement the
     acquired inventory will consist of 400,000 original, hand-painted
     production animation cels. Cool Classic, Inc. had no operating results but
     was a collector of animated art cels and, accordingly, the Company has not
     included any proforma unaudited results of operations.

                                      F-12
<PAGE>

3. MARKETABLE SECURITIES

<TABLE>
<CAPTION>


                                                                                      Gross              Gross
                                                              Estimated             Unrealized         Unrealized
                                               Cost           Fair Value              Gains              Losses
                                          ----------------  ----------------   -----------------  -----------------

<S>                                         <C>                <C>                   <C>                <C>
     May 31, 2001:
       Marketable securities-
        non-current:
              Preferred stock                $98,906           $98,906               $    -              $    -
                                             =======           =======               ======              ======

     May 31, 2002:
       Marketable securities-
        non-current:
              Preferred stock                $     -           $     -               $    -              $    -
                                             =======           =======               ======              ======
</TABLE>

     On June 13, 2000 the Company exchanged 17,500 shares of marketable
     securities owned by the Company for 5,000 shares of other marketable
     securities owned by a shareholder. The Company recorded a realized loss of
     $44,619 for the year ended May 31, 2001 in connection with the exchange.
     The Company sold the 5,000 shares received from the shareholder on the
     exchange date and recorded a contribution of capital by the shareholder in
     the amount of $28,750.

     On March 8, 2001 the Company signed an agreement for the sale of 80,000
     pieces of cel art for 40,000 shares of the buyers Series B Convertible
     Preferred Stock, $100 par value. The preferred stock has an 8% cumulative
     dividend payable quarterly in cash or in kind at option of the Company and
     during the first two years after closing, the stock shall convert into
     common stock at a 20% discount and after two year convertible into common
     stock at 80% of average closing price.

     The Company retained a financial analyst to render an opinion on the value
     of its ownership of the 40,000 shares of the buyers Series B Convertible
     Preferred Stock. Based on the financial analyst findings, the Company
     valued the investment at approximately $750,000. As of May 31, 2001, the
     Company shipped 10,550 (13%) of the 80,000 cels and recorded the investment
     of $98,906 (13% of $750,000). As of May 31, 2002, the Company did not
     fulfill its obligation under the agreement and realized a loss of $98,906
     on this investment during the year ended May 31, 2002.

4. INVENTORY

     The Company's inventory consists of approximately 385,000 original,
     hand-painted production animation cels of which 200,000 cels are secured as
     collateral for the Company's short-term debt (See Note 5) and the balance
     are secured as collateral for the Company's convertible debt.

     As of May 31, 2002 the inventory of animation cels in the amount of
     $258,865 was reserved in full.

                                      F-13
<PAGE>


5. DEBT

     Notes payable consists of the following:

                                                     May 31,         May 31,
                                                      2002            2001
                                                      ----            ----
     Demand note from an officer,
      interest at 12% (a) (b)                      $ 37,124          $      -
                                                   ========          ========




     Convertible notes payable consists of the following:


                                                     May 31,         May 31,
                                                      2002            2001
                                                      ----            ----

     Convertaible promissory note to
      a former director, interest at 10%. The
      note is currently in default. (d)         $   375,000       $   375,000

     Convertible promissory notes,
      interest at 12% (e)                           638,700           658,700
                                                -----------       -----------
                                                $ 1,013,700       $ 1,033,700
                                                ===========       ===========


(a) In November 2001, the Company signed a 12% demand note for $20,000 with an
    officer of the Company. The Company included $1,400 of interest expense on
    this note for the year ended May 31, 2002 which is included in accrued
    expenses.

(b) During the quarter ended May 31, 2002, the Company signed a 12% demand note
    for $17,124 with an officer of the Company. The Company included $43 of
    interest expense on this note for the year ended May 31, 2002 which is
    included in accrued expenses.

(c) In September 2001, the Company received a demand loan for $17,000. In
    December 2001, the Company paid the demand loan in full.

(d) On September 3, 1999, the Company issued a $775,000, 10 1/2 % convertible
    note to a related party (a Director of the Company) due September 3, 2000.
    Interest is payable monthly, commencing December 1999 and payable in arrears
    from September 1999. At May 31, 2002, the Company is twelve months in
    arrears on the payment of interest totaling approximately $39,375. As of
    September 6, 2002, the Company is currently sixteen months in arrears on the
    payment of the interest totaling approximately $52,500.


                                      F-14
<PAGE>



    On August 18, 2000, the Company signed an agreement to extend the due date
    until September 3, 2001. Under this agreement, the Company paid $300,000 in
    principal on September 3, 2000 and an additional $100,000 on November 3,
    2000. The balance of the note, $375,000, which was due on September 3, 2001
    had been extended until March 4, 2002 contingent upon a $90,000 payment due
    November 3, 2001. The Company has not made this payment and is currently in
    default on this note. The note is collateralized by 200,000 pieces of cel
    art. The Company is continuing to negotiate with the lender.

    The $375,000 note is convertible into 120,967 shares of the Company's common
    stock, at the option of the holder, at a conversion price of $3.10 per share
    (which was above fair market value). The automatic conversion provision has
    been terminated. In connection with the execution of this note, the Company
    sold the holder 100,000 shares of the Company's restricted common stock for
    $.001 per share (which was below fair market value) and a warrant to
    purchase 400,000 shares of the Company's common stock at an exercise price
    of $1.00 per share (which was above fair market value). Upon the issuance of
    the shares and the warrants the Company recorded additional consulting
    expenses of $284,000 which will be amortized over the one year term of the
    agreement and an additional $189,333 interest expense which will be
    amortized over the three year term of the note as a result of this
    transaction. Included in interest expense is $63,000 and $63,000 for the
    years ended May 31, 2002 and 2001, respectively.

    In September 2001, the Company cancelled the warrant to purchase 400,000
    shares of the Company's common stock at $1.00 per share and reissued to the
    holder a warrant to purchase 500,000 shares of the Company's common stock at
    $0.50 per share which expire September 2004. The Company recorded an
    additional $27,804 interest expense, which will be amortized over the three
    year term of the note as a result of this transaction. Included in interest
    expense is $6.565 for the year ended May 31, 2002

    The holder of this note received a first priority security in the Company's
    inventory and an insurance policy in the amount of $1.5 million, naming the
    holder as an additional insurer.

(e) Commencing August 2000, the Company issued $658,700 of 12% convertible
    promissory notes which are due the earlier of 180 days from the date of the
    note or upon completion of an equity financing. In connection with the
    notes, the Company issued 3,176,584 and 6,011,016 A warrants and 6,353,167
    and 12,022,033 B warrants to purchase the Company's common stock at $.125
    per share expiring in December 2003 for the years ended May 31, 2002 and May
    31, 2001, respectively. The Notes are secured by the assets of the Company
    and are subordinated to the $375,000 note. In connection with the notes, a
    registration rights agreement was signed which includes a mandatory
    registration clause whereby if the Company does not file a registration
    agreement with the SEC within 180 days from the date of the note, on the
    first day thereafter and each 30 day period thereafter the Company will pay
    a monthly penalty of 3% of the outstanding units. The penalty is payable in
    additional units until such a time as the shares underlying the note and
    warrants are eligible to be sold. The notes and warrants are convertible
    into 36,750,400 shares of common stock at $.125 per share. The fair market
    value of the stock was not readily determinable at the time of issuance.
    Interest is payable monthly in arrears which the Company has the option to
    pay in cash or in additional units of the Company's common stock. This
    resulted in an additional $904,061 and $1,337,800 of interest expense for
    the years ended May 31, 2002 and May 31, 2001 which will be amortized over
    the term of the notes. Included in interest expense is $677,055 and $326,300
    for the years ended May 31, 2002 and 2001, respectively.

                                      F-15
<PAGE>


    In November 2001, $25,000 of these convertible promissory notes and interest
    of $11,362 were converted into 290,896 shares of common stock. In connection
    with this conversion, 581,792 cashless warrants were exercised and 374,009
    shares of common stock were issued. The Company also issued an additional
    $5,000 of the convertible notes.

(f) Upon the execution of the Memorandum of Understanding the Company received a
    transaction fee of $75,000 in the form of a loan from Parentech. The term of
    the loan is six months and accrues interest at the rate of 8% per annum. In
    March, 2002, the Company amended the agreement with Parentech in which
    Parentech cancelled the loan and agreed to accept 683,108 shares of the
    Company's common stock and 186,000 shares of the Company's preferred stock
    for full payment of the note.


6. STOCK OPTIONS AND WARRANTS

     In September 1999, the Company issued three-year warrants which expire
     September 2002 to purchase 666,666 shares of Common Stock at an exercise
     price of $1.00 per share (which was above fair market value) in connection
     with the execution of a consulting agreement and convertible note. This
     resulted in an additional $284,000 consulting expense which will be
     amortized over the one year term of the agreement, and an additional
     $189,333 interest expense which will be amortized over the three year term
     of the convertible note.

     In August 2000, the Company issued warrants to purchase 18,033,049 shares
     of Common Stock at an exercise price of $0.125 per share in connection with
     the execution of convertible promissory notes. The fair market value of the
     Company's stock was not readily determinable at the time of issuance. In
     November 2001, 581,792 warrants were exercised and 374,009 shares of common
     stock in connection with the conversion of $25,000 of convertible
     promissory notes. The warrants expire in December 2003. This resulted in an
     additional $904,061 and $1,337,800 interest expense for the years ended May
     31, 2002 and May 31, 2001 which will be amortized over the term of the
     agreement.

     In September 2001, the Company cancelled three year warrants which expire
     September 2002 to purchase 400,000 shares of common stock at an exercise
     price of $1.00 per share and re-issued three year warrants which expire
     September 2004 to purchase 500,000 shares of common stock at an exercise
     price of $.50 per share.

     The fair value of warrants are estimated on the date of grant using the
     Black-Scholes option pricing method with the following weighted average
     assumptions issued for grants in the year ending May 31, 2002 and 2001,
     respectively: dividend yield of -0-%, -0-% and -0-%, expected volatility of
     80%, 80% and 1%, risk free interest rate of 6%, 7% and 7% and expected
     lives of forty-one months and one to three years.

                                      F-16
<PAGE>



     Information regarding the Company's warrants for the three years ended May
     31, 2002 is as follows:
<TABLE>
<CAPTION>


                                         May 31, 2002                    May 31, 2001                      May 31, 2000
                               -------------------------------  --------------------------------  ----------------------------------

                                             Weighted Average                  Weighted Average                    Weighted Average
                                   Shares     Exercise Price       Shares       Exercise Price      Shares         Exercise Price
                               ------------ ------------------  -----------   ------------------  ----------      ------------------
<S>                             <C>            <C>              <C>                <C>            <C>                <C>
Warrants outstanding
 beginning of period            18,699,715      $ 0.28             666,666         $  1.00              --             $    --
Warrants exercised                (581,792)     $ 0.13                  --         $    --              --             $    --
Warrants granted                10,029,031      $ 0.14          18,033,049         $ 0.125         666,666             $ 1.000
Warrants cancelled                (400,000)     $ 1.00                  --         $    --             --                   --
                                ----------                      ----------                         -------
Warrants outstanding,
 end of period                  27,746,954      $ 0.22          18,699,715         $  0.28         666,666             $  1.00
                                ==========                      ==========                         =======

Warrants price range
 end of period                               $.125 - $1.00                    $0.0125 - $1.00                      $1.00

Weighted-average fair value
 of warrants granted during
 the year                                       $0.09                             $0.07                            $0.71

</TABLE>



     The following table summarizes information about fixed-price stock warrants
     outstanding at May 31, 2002:
<TABLE>
<CAPTION>

                                                 Weighted Average             Weighted                Number            Weighted
      Range of         Number Outstanding      Remaining Contractual      Average Exercise        Exercisable at        Average
  Exercise Prices        at May 31, 2002               Life                    Price               May 31, 2002      Exercise Price
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>                     <C>                        <C>                     <C>               <C>
 $0.125 - $1.00            28,328,746                1.4 Years                 $0.22                28,328,746            $0.22
</TABLE>

7. STOCK BASED COMPENSATION

     On September 1, 1999, the Company issued 2,093,618 shares of common stock
     for consulting services rendered. The Company valued these shares at fair
     market value and recorded additional compensation expense of $213,653 which
     is included in selling general and administrative costs in the Statement of
     Operations for the year ended May 31, 2000.

     In May 2001, the Company issued 1,000,000 shares of common stock for
     consulting services rendered. The Company valued these shares at $.20 per
     share and recorded consulting expense of $200,000 which is included in SG&A
     in the Statement of Operations for the year ended May 31, 2001. The fair
     market value of the Company's stock was not readily determinable at the
     time of issuance.

8. INCOME TAXES

     The Company has a net operating loss ("NOL") carryforward of approximately
     $5,395,000 expiring in various years through 2014. The Company has not
     reflected any benefit of such NOL carryforward in the accompanying
     financial statements in accordance with Financial Accounting Standards
     Board Statement No. 109 "Accounting for Income Taxes" (SFAS 109) as the
     realization of this deferred tax benefit is not more than likely.


                                      F-17
<PAGE>


     The Tax Reform Act of 1986 provided for a limitation on the life of NOL
     carryforwards, following certain ownership changes. As a result of
     transactions in the Company's common stock during the year ended May 31,
     2000, a change in ownership of greater than 50%, as defined, has occurred.
     Under such circumstances, the potential benefits from utilization of tax
     carryforwards may be substantially limited or reduced on an annual basis.

     There is no provision for income taxes for the years ended May 31, 2002 and
     2001, as the Company had net losses.

     The tax effect of the net operating loss carryforward on deferred income
     taxes at May 31, 2002 and 2001 was as follows:
<TABLE>
<CAPTION>

                                                       May 31,                                        May 31,
                                                        2002                                           2001
                                     -------------------------------------------    ------------------------------------------
                                          Temporary                                     Temporary
                                         Difference             Tax Effect              Difference            Tax Effect
                                     --------------------   --------------------    -------------------   --------------------
<S>                                      <C>                    <C>                    <C>                    <C>
Net operating loss                       $ 5,395,000            $ 2,158,000            $ 3,434,000            $ 1,374,000

Valuation allowance                       (5,395,000)            (2,158,000)            (3,434,000)            (1,374,000)
                                         -----------            -----------            -----------            -----------
                                         $        --            $        --            $        --            $        --
                                         ===========            ===========            ===========            ===========
</TABLE>



9. EXTRAORDINARY GAINS

     During August 1999, the Company issued 2,108,618 common shares to
     extinguish various long-term debt and accrued interest. In connection with
     these transactions the Company recorded an extraordinary gain of
     approximately $246,974, net of tax $127,000 for the year ended May 31,
     2000.


10. RELATED PARTY TRANSACTIONS

     (a) In September 1999, the Company issued to the secretary and director of
         the Company 75,000 shares for services rendered valued at $7,500 and
         50,000 shares purchased for $5,000 pursuant to a 504 offering.

     (b) In September 1999, the Company issued 1,158,845 shares of common stock
         to a consultant of the Company who subsequently become CEO/President of
         the Company for services rendered valued at $115,885.

     (c) A related party purchased 1,000 cels at $30 per cel for the year ended
         May 31, 2001.

     (d) During the year ended May 31, 2001, a related party was sold $600,000
         12% convertible promissory notes as described in Note 5.

11. PENSION PLAN

     The Company has a 401-k Retirement Plan that matches employee contributions
     up to 7% of payroll. The Company contributed $-0-, $1,347 and $3,150 to the
     401-k plan for the years ended May 31, 2002, 2001 and 2000, respectively.

                                      F-18
<PAGE>



12. SHAREHOLDERS' DEFICIENCY

     Preferred Stock
     ---------------

     As of May 31, 2002, the Company has 252,000 shares of 8% cumulative
     convertible preferred stock (the Preferred Shares) outstanding. Holders of
     the Preferred Shares are entitled to receive cumulative cash dividends at
     the annual rate of $0.20 per share payable quarterly when and if declared
     by the Board of Directors. The Company has not declared a dividend since
     issuance.

     The Preferred Shares are convertible, in whole or in part, at the option of
     the holders thereof, into .2222 shares of common stock.

     During November 2001, 22,000 shares of preferred stock were converted into
     4,950 shares of common stock. During May 2002, 48,000 shares of preferred
     stock were converted into 10,800 shares of common stock.

     In March 2002, the Company issued 186,000 shares of preferred stock in
     connection with the Company's merger agreement with Parentech.

     The Preferred Shares rank senior to the common stock. The Preferred Shares
     have a liquidation preference of $2.50 per share plus all declared and
     undeclared dividends which total $151,560 at May 31, 2002.

     In August 1999, the shareholders approved a 1 for 50 reverse stock split of
     this common stock which had the effect of reducing the conversion feature
     of the Preferred Stock from 11.25 shares of common to .2222 shares of
     common stock.

13. COMMITMENTS AND CONTINGENCIES

     Leases
     ------
     On September 3, 1999, the Company signed a sublease and assembly agreement
     with a warehouse facility. The sublease requires the Company to pay certain
     utility and related charges.

     Rent expense for the years ended May 31, 2001, 2000 and 1999 was $12,000,
     $12,000 and $8,000, respectively.

     The assembly agreement requires the Company to pay actual labor and
     material costs plus 15% of those costs to assemble the cels. The agreement
     also requires the Company to pay actual labor, material and shipping costs
     plus 15% of those costs to ship the cels. All costs are expensed as
     incurred.

     Distribution Agreement
     ----------------------
     On September 3, 1999, the Company signed a three-year distribution
     agreement with an option to extend it for an additional two years. The
     distribution agreement requires the Company to pay a fee of 50% of the
     distributors retail price when the distributor sells directly to the
     ultimate consumer and 25% when sold to wholesalers. No sales have been made
     under this agreement.

                                      F-19
<PAGE>





ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

        Not applicable.

PART III

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

     The following table and biographical outlines set forth the directors,
positions and officers within the Company privately held by each executive
officer of the Company and a brief account of the business experience of each
such director and officer for the past five years.

                 Name                   Age               Company Position
       -------------------------    ------------    --------------------------
       Charles F. Trapp                 53          Chairman, Chief Executive
                                                      Officer and President
       Louis A. Pistilli                47          Director
       Giltner Stevens                  55          Director


     Charles F. Trapp is a Certified Public Accountant and has served as the
Company's Chairman, Chief Executive Officer and President since September 1999.
Prior to that time, he was President of Somerset Kensington Capital Co. Inc., a
Company involved in financial restructuring and turnaround management. Mr. Trapp
was Vice President of Finance for A.W. Computer Systems, Inc. from September
1996 to February 1999. A.W. filed Chapter 11 in May 1998 and converted to
Chapter 7 in February 1999.

     Louis A. Pistilli is a Certified Public Accountant and has been the
Secretary and a director of the Company since September 1999. He has been the
managing partner of the accounting firm of Pistilli & Company LLC since January
1999. From January 1990 to December 1998, Mr. Pistilli served as managing
partner of the accounting firm of Pistilli & Company.

     Giltner Stevens has been a director of the Company since July, 2000. He now
serves as a corporate director for several companies and is a Director of Arvest
Bank of Joplin, Missouri. Since 1977, he served as the President and Chief
Executive Officer of the Brady Stevens Company, which specialized in residential
re-sales, as well as commercial, industrial real estate and property management.
He received a B.S. in business administration from the University of Missouri.
He has served as the Chairman of the Joplin Chamber of Commerce and as President
of the Joplin Business Industrial Development Authority. Mr. Stevens resigned in
July 2002.



                                       11
<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

     The following sets forth, for the fiscal years ended May 31, 2001, 2000 and
1999, the annual and long-term compensation paid or accrued of the Company's
named officers.


                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                                                                     Long-Term
                                                                                                                Compensation Awards
                                                                                                                     Securities
            Name and                                                                  Annual Compensation            Underlying
       Principal Position             Year         Salary       Bonus     Other         Options/SARS (#)            Compensation
-----------------------------      ----------     --------     -------   -------     ----------------------     --------------------
<S>                                <C>            <C>          <C>       <C>         <C>                        <C>
Charles Trapp                         2002        $ 60,000     $    --   $    --
President, Chairman                   2001 *      $ 60,000
of the Board, Chief                   2000        $ 45,000
Executive Officer
</TABLE>


* Does not include $1,347 in 2001 and $3,150 in 2000 contributed by the Company
  to the 401(k) plan for Charles Trapp. Salary of $60,000 and $55,000 is accrued
  as of May 31, 2002 and May 31, 2001, respectively.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth the name and address of each officer and
director of the Company and each person who owns beneficially more than five
percent of the Common Stock of the Company, and the number of shares owned by
each such person and by all officers and directors as a group.

<TABLE>
<CAPTION>

          Name and Address of                     Amount and Nature
           Beneficial Owner                          of Ownership                    Approximate % of Class
----------------------------------------     -----------------------------     -----------------------------------
<S>                                                 <C>                                    <C>
Charles F. Trapp, Chairman,
  Chief Executive Officer
  and President (1)                                   1,158,845                              13.4%
Louis Pistilli, Secretary
  and Director                                          125,000                               1.4
Joe Cool Collectables, Inc.                           2,369,788                              35.5
Giltner Stephens (2)                                    833,268                               9.6
Herman Rush (3)                                         966,667                               3.1
Directors and Officers as
 a Group                                              2,283,845                              26.4
</TABLE>

(1) Does not include 8,682,656 shares underlying convertible notes, 8,682,656 A
    warrants and 17,365,312 B warrants that are being cancelled upon completion
    of the merger with Parentech, Inc.
(2) Includes 120,968 shares underlying a convertible note, 312,300 shares of
    common stock and warrants to purchase 500,000 shares of common stock at
    $0.50 per share which expire in September 2004.
(3) Includes an option to purchase 266,667 shares at $1.00 per share which
    expires in September 2002.


                                       12
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Mr. Herman Rush, who owns 700,000 shares of the Company's common stock and
an option to purchase 266,667 shares of the Company's issued and outstanding
common stock at $1.00 per share which expires September 2002, is the President
of Royal Animated Art, Inc. The Company has entered into a Sub-Lease and
Assembly Agreement, as well as a Distribution Agreement, with Royal Animated
Art, Inc.

     On September 2, 1999, the Company acquired the assets, consisting of
inventory or original, hand-painted production animation cels, of Cool Classic,
Inc., a subsidiary of Joe Cool Collectibles, Inc. for 3,069,788 shares of the
Company's common stock.

     Mr. Giltner Stephens owns 350,000 shares of the Company's common stock, a
warrant to purchase 500,000 shares at $0.50 per share which expires in September
2004 and a one year $775,000 convertible note due September 2, 2002 convertible
into 250,000 shares at $3.10 per share.

     In September 1999, the Company issued to Mr. Louis Pistilli 125,000 shares
(75,000 at $.001 per share for services rendered and 50,000 at $.10 per share).

     In September 1999, the Company issued to Charles F. Trapp 1,158,845 shares
of common stock at $.001 per share in exchange for services rendered.

     Charles F. Trapp has purchased 1,000 cels from the Company at a price of
$30 per cel.

     During the year ended May 31, 2001, the Company issued Charles F. Trapp
$600,000 of 12% convertible promissory notes.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a) The following financial statements and supplementary financial
information are filed as part of this Annual Report on Form 10-KSB:

                                                                     Page
                                                                     ----
      1. Financial Documents:

     Independent Auditors' Report                                  F-1 - F-2

     Balance Sheets, May 31, 2002
      and 2001                                                        F-3

     Statements of Operations,
      Years Ended May 31, 2002,
      2001 and 2000                                                   F-4

     Statements of  Stockholders'
      Deficiency, Years Ended May 31,
      2002, 2001 and 2000                                          F-5 - F-6



                                   13
<PAGE>


     Statements of Cash Flows,
      Years Ended May 31, 2002,
      2001 and 2000                                                   F-7

     Notes to  Financial Statements                                F-8 - F-19

     2. Financial Statement Schedules:

     All schedules are omitted because they are inapplicable, not required or
the information is included in the financial statements or notes thereto.

     (b) Reports on Form 8-K:

     The Company did not file any Reports on Form 8-K during the fourth quarter
of the year ending May 31, 2002.

     (c) The following Exhibit Index sets forth the applicable exhibits
(numbered in accordance with Item 601 of Regulation S-B) which are required to
be filed with this Annual Report on Form 10-KSB.

Exhibit No.       Description
-----------       -----------

10.7              Agreement for sale of assets, dated March 8, 2001 by and
                  between the Company and 1 Bid America, Inc. incorporated by
                  reference.

10.8              12% Convertible Promissory Note.

11                A statement regarding the computation of earnings per share is
                  omitted because such computation can be clearly determined
                  from the material contained in this Annual Report on Form
                  10-KSB.


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<PAGE>


                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.



                            PREMIER CLASSIC ART, INC.



Date: September 12, 2002                        By: /s/ Charles F. Trapp
                                                    ----------------------------
                                                    Charles F. Trapp, President
                                                    (Principal Financial and
                                                     Accounting Officer)



 /s/ Charles F. Trapp
---------------------------------------
Charles F. Trapp, President
 and Director


 /s/ Louis A. Pistilli
---------------------------------------
Louis A.  Pistilli, Director







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