American Entertainment & Animation Corporation Announces Letter of Intent With Words & Pictures Productions Inc.

Business Editors

THORNHILL, Ontario, Canada--(BUSINESS WIRE)--May 22, 2003

American Entertainment & Animation Corporation (Pink Sheets:AEAN) has signed a Letter Of Intent with Florida based Words & Pictures Productions Inc. to purchase the full intellectual property rights associated with the "Uncle Mugsy" property and to co-produce a full length 3D animated feature film.

The animated feature will be based on the book, "Uncle Mugsy and the Terrible Twins of Christmas," written by Eric Metaxas and illustrated by Tim Raglin, and will be adapted for film.

Eric Metaxas worked in creative development and as a writer for Big Idea Productions, creators of VeggieTales children's videos. Lyle the Kindly Viking, which Eric co-wrote, was named Best Direct-to-Home video production at the World Animation Conference. Eric has also authored many children's books including The Bible ABC (Tommy Nelson) and the best-selling and Angel Award-winning Prince of Egypt A-Z, a tie-in to DreamWorks SKG's animated feature film. Amazon honored Eric's Squanto and The Miracle of Thanksgiving with their "Number One Bestseller" award for Thanksgiving 1999.

Tim Raglin has illustrated many children's picture books including Deputy Dan (Random House) and the Five Funny Frights series (Scholastic), which have collectively sold over two million copies to date. His most recent works include Go Track a Yak (Simon and Schuster), The Wolf Who Cried Boy (Viking Penguin), William Shakespeare's Twelfth Night (Dial Books) and The Thirteen Days of Halloween (Troll). Tim's illustrations have also been commissioned by well known periodicals including: The New York Times, Sports Illustrated, Smithsonian, Rolling Stone, Sesame Street, Time magazines and the Walt Disney Corporation.

The Letter of Intent provides that AEAN will arrange the financing for the animated feature film, and that AEAN and Words & Pictures will benefit equally as co-executive producers. Subject to distribution and other fees, AEAN will receive 85% of the net revenues generated through licensing of the rights associated with film, broadcast, cable television, home video, publishing, merchandising and all other media related rights. AEAN intends to source the financing for the production through debt and equity financing.

"With many such creative properties in the pipeline, Words & Pictures looks forward to a long and prosperous relationship with its animation partner American Entertainment & Animation Corporation," stated Marie-Noel Bastien, President and CEO of Words and Pictures.

"Now that the production deal has been agreed to, as agent for Words & Pictures, we will be quite focused on choosing a suitable distribution partner for the Picture," stated John Silbersack, Senior Vice President, Trident Media Group.

"We are extremely pleased to announce this Letter of Intent with an American producer that will allow us to demonstrate our capability to produce high quality 3D animated full length feature films. Now that the Letter of Intent has been signed, we will be working towards finalizing a financing commitment followed by the production agreement with a prominent animation studio soon to be announced, and negotiating the best possible distribution agreement for the feature," said Marc Hazout, President and CEO.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays beyond the company's control with respect to market acceptance of new technologies or products, delays in testing and evaluation of products, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.