U. S. SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

_____________________________________________

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2003

[ ] 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 0-29657

_________________________________________________

(Exact name of small business issuer as specified in its charter)

8500 Leslie Street, Suite 500

Thornhill, Ontario L3T 7M8

(Address of Principal Executive Offices)

(905) 731-9775

(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: The issuer had 22,866,515 shares of its Common Stock, $0.0001 par value, as of November 21, 2003.

1. Basis of Presentation

The accompanying unaudited consolidated financial statements of American Entertainment and Animation Corp., and Subsidiary ("the Company") have been prepared in accordance with Regulation S-B promulgated by the Securities and Exchange Commission and do not include all of the information and notes required by generally accepted accounting principles in the United States of America for complete financial statements. In the opinion of management, these interim financial statements include all adjustments necessary in order to make the financial statements not misleading. The results of operations for such interim periods are not necessarily indicative of results for a full year. The unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company and management's discussion and analysis of financial condition and results of operations included in the annual report on Form 10-KSB for the year ended December 31, 2002. All material inter-company accounts and transactions between the Company and its subsidiaries have been eliminated.

2. Stock Acquisition and Divestiture

On April 22, 2002, the Company issued 20,000,000 shares of common stock in exchange for 100% of the outstanding common stock of Cyper Entertainment, Inc. ("Cyper"), a company located in Seoul, Korea. Cyper is a 3D Digital Animation Production company providing services to the television, commercial and film industries. For accounting purposes, the acquisition was recorded as a recapitalization of Cyper, with Cyper as the acquirer.

On September 4, 2002, the Company rescinded the acquisition of Cyper as a result of Cyper's failure to perform its obligation to provide the Company with certain funding in order to comply with its reporting obligations as a public company. As a result of the rescission, the 20,000,000 shares of common stock of the Company were cancelled. For the three and nine month periods ended September 30, 2003, the financial statements reflect the results of operations of the Company only.

3. Going Concern

The Company's financial statements for the three and nine months ended September 30, 2003 have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has incurred a net loss of approximately $110,900 and $351,000 for the three and nine months ended September 30, 2003, and has accumulated losses since inception of approximately $2,075,000. In addition, the Company has a working capital deficiency of approximately $558,000 at September 30, 2003. These factors create an uncertainty about the Company's ability to continue as a going concern. Management's plans to alleviate these factors and allow the Company to continue as a going concern primarily consisting of seeking additional equity instruments. The ability of the Company to continue as a going concern is dependent on the success of its plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

4. Income Taxes

For the nine months ended September 30, 2003, the deferred tax asset of approximately $566,900 generated by net operating losses has been offset by a valuation allowance of a like amount, as the Company believes that it is more than likely than not that the losses will not be utilized.

5. Loss per Share

Loss per common and common equivalent share is computed based on the weighted average number of common shares outstanding. Due to the antidilutive effect of the assumed exercise of outstanding common stock equivalents at September 30, 2003, loss per share does not give effect to the exercise of these common stock equivalents in the current reporting period, but they may dilute earnings per share in the future. For the three and nine months ended September 30, 2003, the outstanding options and warrants were nil.

6. Litigation

In the normal course of its operations, the Company has been or, from time to time, may be named in legal actions seeking monetary damages. While the outcome of these matters cannot be estimated with certainty, management does not expect, based upon consultation with legal counsel, that they will have a material effect on the Company's business or financial condition or result of operations.

7. Related Parties

Advances payable - related parties consists of an advance received from a company controlled by an officer and shareholder of the Company. The advance does not have a stated maturity date or interest rate.

8. Statements of Cash Flows Supplemental Disclosures

For the three and nine months ended September 30, 2003, there were no cash payments for income taxes or interest expense by the Company.

During the nine months ended September 30, 2003, the Company issued 2,111,111 shares of its common stock in lieu of approximately $95,000 cash in settlement of related party advances.

9. Commitments and Contingencies

In July 2002, the Company entered into an employment agreement with an officer of the Company. The agreement provides for an annual salary of approximately $252,000. During the nine months ended September 30, 2003, $189,000 is included in the statement of operations, in management and director fees. The term of the employment agreement is for three years and carries an option for renewal upon mutual agreement between the officer and the Company.

In May 2003, the Company signed a letter of intent with Words and Pictures Productions Inc., a Florida-based company to acquire the intellectual and property rights and to co produce a full-length 3D animated feature film.

10. Subsequent Events

On October 21, 2003, the company issued 2,000,000 of its common shares, valued at $40,000, for the settlement of advances due to an officer and director in the amount of $40,000.

On November 14, 2003, the Company issued 750,000 of its common shares, valued at $15,000, for the settlement of advances due to an officer and director in the amount of $15,000.

CERTAIN FORWARD-LOOKING INFORMATION

Information provided in this Quarterly Report on Form 10QSB may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that are not historical facts and information. These statements represent the Company's expectations or beliefs, including, but not limited to, statements concerning future and operating results, statements concerning industry performance, the Company's operations, economic performance, financial conditions, margins and growth in sales of the Company's products, capital expenditures, financing needs, as well assumptions related to the forgoing. For this purpose, any statements contained in this Quarterly Report that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based on current expectations and involve various risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or views expressed herein. The Company's financial performance and the forward-looking statements contained herein are further qualified by other risks including those set forth from time to time in the documents filed by the Company with the Securities and Exchange Commission, including the Company's most recent Form 10SB.

RESULTS OF OPERATIONS

Net sales were $0 for both the quarters ended September 30, 2003 and September 30, 2002. The reason for the lack of sales in the third quarter of 2003 is that the Company does not have a source of revenue and continues to seek prospects for potential business combinations with viable businesses.

Total operating expenses for the Company increased slightly by $3,466 over the same period last year to $110,962, which is approximately 3% percent above the amount of $107,496 of operating expenses for the quarter ended September 30, 2002.

Net loss for the quarter ended September 30, 2003 was ($110,929), compared to a net loss of ($193,294) for the similar period in 2002. The principal reason for this difference was the payment of cash and stock valued at approximately $80,000 for the settlement of the rescission of the acquisition of Cyper Entertainment Inc. which was allocated during the quarter ending September 30, 2002.

Net sales were $0 for the nine months ended September 30, 2003 and for the same period ended September 30, 2002 for the reasons stated above.

Total operating expenses for the Company increased by $180,781 over the same period last year. The principal reasons for the increase are management and directors fees of $107,000 and legal and professional fees of $89,980, the latter of which were considerably higher as a result of litigating the proceeding in the Court of Chancery for the State of Delaware against Duk Jin Jang, John Hyoki Chung, Jason Chung and Michael Chung.

Net Loss for the nine months ended September 30, 2003 was ($351,032), compared to a net loss of ($270,040) for the similar period in 2002. The principal reasons for this are management, legal and professional fees as described.

LIQUIDITY AND CAPITAL RESOURCES

The Company will need additional capital in order to continue its attempt to acquire viable businesses and properties as well as to finance the administrative costs including but not limited to legal and accounting fees. The Company's management is seeking additional capital however, there is no assurance that this needed capital can be raised, or raised on terms acceptable to the Company.

GOING CONCERN

As of September 30, 2003 the Company had a stockholders' deficit of ($558,054). The financial statements therefore have been prepared on a going concern basis as explained in Note 3 to the Financial Statements.

The Company believes that it has sufficient internal controls and procedures for a company that is not engaged in active operations. When and if the Company acquires or commences active operations, the Company anticipates instituting internal controls and procedures sufficient for the nature and scale of operations at that time.

None.

None during the quarter ended September 30, 2003.

None

None.

None.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.