UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the quarterly period ended September 30, 2005

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______ to ________.

Commission file number: 33-18143


PEAK ENTERTAINMENT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

            NEVADA                                              87-0449399
(State or other jurisdiction of                               (IRS Employer
 incorporation or organization)                             Identification No.)

Bagshaw Hall, Bagshaw Hill, Bakewell, Derbyshire, UK DE45 1DL
(Address of principal executive offices)

44 1629 814555
(Issuer's telephone number)


Check whether the issuer (1) has 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 [ ]

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of November 1, 2005, we had 31,470,108 shares of common stock issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]


PEAK ENTERTAINMENT HOLDINGS, INC.

TABLE OF CONTENTS

                                                                                                 Page

PART I.  FINANCIAL INFORMATION
Item 1.  Condensed Consolidated Financial Statements (unaudited)                                  3
         Condensed Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004     3
         Condensed Consolidated Statements of Operations for the Nine Months
                  Ended September 30, 2005 and 2004                                               4
         Condensed Consolidated Statements of Cash Flows for the Nine Months
                  Ended September 30, 2005 and 2004                                               5
         Notes to Condensed Consolidated Financial Statements                                     7

Item 2.  Management's Discussion and Analysis                                                    24

Item 3.  Controls and Procedures                                                                 32

PART II. OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                             33
Item 5.  Other Information                                                                       34
Item 6.  Exhibits                                                                                35

SIGNATURES                                                                                       36

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PEAK ENTERTAINMENT HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET

                                                            December 31,      September 30,
                                                               2004               2005
                                                            -----------       -----------
                                                             (Audited)        (Unaudited)
                                                            -----------       -----------
ASSETS

CURRENT ASSETS
Cash and cash equivalents                                   $    10,235       $      --
Accounts receivable                                             498,187           902,168
Inventory                                                        91,743              --
Other current assets                                            861,728         1,048,358
                                                            -----------       -----------
Total current assets                                          1,461,893         1,950,526

Deferred professional fees                                      205,834           186,482
Plant and equipment, net                                        259,649           215,309
Intangible assets, net of amortization                        1,972,683         1,829,489
                                                            -----------       -----------
                                                            $ 3,900,059       $ 4,181,806
                                                            ===========       ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

Accounts payable                                            $ 1,301,539       $ 1,356,127
Short-term borrowing                                               --             209,505
Stockholders' advance account                                   752,522           551,215
Licenses fees payable                                            67,831            62,064
Other accrued liabilities                                     2,290,629         2,525,697
                                                            -----------       -----------
Total current liabilities                                     4,412,521         4,704,878

LONG TERM LIABILITIES

License fees payable                                          1,234,119         1,199,882
Convertible debentures                                          330,652         1,032,005
                                                            -----------       -----------
Total long term liabilities                                   1,564,771         2,231,887

STOCKHOLDERS' DEFICIT

Common stock, par value $0.001 - 900,000,000
   Shares authorized, 29,040,955 and 31,470,108 issued
   and outstanding                                               29,050            31,470
Additional paid in capital                                    4,576,739         6,850,654
Accumulated deficit                                          (5,960,203)       (9,342,865)
Other comprehensive income                                     (722,819)         (294,218)
                                                            -----------       -----------
Total stockholders' deficit                                 (2,077, 233)       (2,754,959)
                                                            -----------       -----------
                                                            $ 3,900,059       $ 4,181,806
                                                            ===========       ===========

See accompanying notes to consolidated financial statements.

3

PEAK ENTERTAINEMNT HOLDINGS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)

                                          Three months       Three months       Nine months        Nine months
                                             ended              ended              ended               ended
                                          September 30,      September 30,      September 30,      September 30,
                                              2004               2005               2004               2005
                                          ------------       ------------       ------------       ------------
Revenue                                   $    138,474       $    437,908       $    248,014       $  1,090,688

Cost of Goods Sold                             101,418             76,743            186,332            191,926

                                          ------------       ------------       ------------       ------------
Gross profit                                    37,056            361,165             61,682            898,762

Operating expenses
Selling, general and administrative            505,452            641,973          2,104,581          1,811,702
Non cash expenses                               87,136            431,990            339,392          1,854,127
                                          ------------       ------------       ------------       ------------
Total operating expenses                       592,588          1,073,963          2,443,973          3,665,829



                                          ------------       ------------       ------------       ------------
Loss from operations                          (555,552)          (712,798)        (2,382,291)        (2,767,067)

Gain/ (loss) on settlement of
convertible
debentures and accrued interest               (434,800)                              443,376            (37,559)

Foreign exchange gain                          (26,720)           (61,673)             9,092           (341,868)

Interest expense                              (127,077)            (4,729)          (473,101)          (236,168)


                                          ------------       ------------       ------------       ------------
Net loss                                  $ (1,144,129)      $   (779,199)      $ (2,402,924)      $ (3,382,662)
                                          ============       ============       ============       ============

Basic and diluted net loss per share      $      (0.04)      $      (0.02)      $      (0.10)      $      (0.11)
                                          ============       ============       ============       ============

Weighted average common shares
outstanding                                 26,928,879         31,470,108         24,808,303         30,824,904
                                          ============       ============       ============       ============

See accompanying notes to consolidated financial statements.

4

PEAK ENTERTAINMENT HOLDINGS, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

                                                                             Nine months ended  Nine months ended
                                                                               September 30,      September 30,
                                                                                   2004               2005
                                                                                -----------       -----------
Cash flows from operating activities

Net loss                                                                        $(2,402,924)      $(3,382,662)

Adjustment to reconcile net loss to net cash used in operating activities:

Depreciation                                                                         13,985            80,054
Amortization of intangible assets                                                   106,360           271,610

Foreign exchange gain/(loss)                                                         (9,092)          341,868
Accretion of discount on debentures                                                 245,941           110,293

Gain on settlement of debentures                                                   (443,376)             --
Non-cash interest                                                                      --             418,396
Non-cash professional and consulting fees                                           713,695         1,854,127
Loss on sale of intangibles                                                          65,222

Changes in working capital:

Accounts receivable                                                                 (16,270)         (403,981)
Inventories                                                                          55,400            91,743

Other current assets                                                                (83,009)         (186,630)
Accounts payable and other accrued liabilities                                    2,134,102           283,889
                                                                                -----------       -----------


Net cash used in operating activities                                              (380,034)         (521,293)


Cash flows from investing activities:


Purchase of plant and equipment                                                      (4,456)          (35,714)

Purchase of intangibles                                                          (2,060,244)         (128,416)
Issue of debentures                                                               2,024,000           560,000
Settlement of debentures                                                         (1,000,000)             --


                                                                                -----------       -----------
Net cash (used in)/ provided by investing activities                               (895,065)          395,870

See accompanying notes to consolidated financial statements.

5

PEAK ENTERTAINMENT HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(CONTINUED)

                                                                   Nine months ended        Nine months ended
                                                                     September 30,            September 30,
                                                                         2004                     2005
                                                                     -----------              -----------
Cash flows from financing activities:                                $                        $


Short term (repayment) borrowing, net                                   (281,460)                 209,505
Stockholders' advances (repayment) account                                44,420                 (201,307)
Issue of common stock shares                                             350,000                     --
Issue of common stock purchase warrants                                  150,000                     --


                                                                     -----------              -----------
Net cash provided by/(used in) financing activities                      262,960                    8,198

Cumulative translation adjustment                                        115,865                  101,092




(Decrease) increase in cash and cash equivalents                        (136,206)                 (16,133)


Cash and cash equivalents, beginning of period                           152,339                   16,133

Cash and cash equivalents, end of period                             $    16,133              $         0


Supplemental disclosures of cash flow information


Interest Paid                                                        $     1,300              $        60


Purchases of licenses through issuance of long-term liabilities      $ 1,733,685                     --


Issuance of shares in settlement of liability                        $   443,500                     --

See accompanying notes to consolidated financial statements.

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
                                   (Unaudited)

1        Description of Business

         Peak Entertainment Holdings, Inc, formerly Peak Entertainment Ltd, was
         formed on November 20, 2001 as an integrated media group focused on
         children. Its activities include the production of television
         entertainment, character licensing and consumer products development,
         including toy and gift manufacturing and distribution. Integration
         enables Peak Entertainment Holdings, Inc to take property from concept
         to consumer in-house, controlling and co-ordinating broadcast,
         promotions and product launches (toys, apparel, video games, etc.) to
         build market momentum and worldwide brand quality.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. As shown in the financial statements, at September 30, 2005 and for the nine months then ended, the Company has suffered recurring losses, negative cash flows from operations, negative working capital, an accumulated deficit of $9,031,232 and a stockholders' deficiency of $2,754,959.

As shown in the accompanying financial statements, the Company incurred a net loss of $3,382,662 during the current period. Current economic conditions have limited the ability of the Company in acquiring additional equity capital.

In response to economic conditions, management has implemented expense reduction and revenue enhancements as well as initiated additional investor financing. Specifically, management has implemented reductions on the salaries of senior management. Also, nonessential capital expenditures, travel and other expenses have either been eliminated or postponed. Management has shifted its corporate and business development activities to focus strategic resources. To that end, the Company continues to pursue a three million dollar bridge financing round directed toward existing and strategic investors. Management believes the combination of these actions maximizes the probability of the Company's ability to remain in business.
A portion of that capital has been secured recently but it is still uncertain at this stage whether the Company will be totally successful in accomplishing these objectives. Without this capital there is some uncertainty about the Company's ability to continue as a going concern though management are close to completing this transaction following the appointment of credible merchant bankers and management consultants. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

The Company has developed a business plan to increase revenue by capitalizing on its integrated media products The Company is in constant discussions with outside sources to provide the required funds to cover operational costs. This continuous need raises substantial doubt about the Company's ability to continue in existence. The financial statements do not contain any adjustments that might result from the outcome of this uncertainty. While the Company is optimistic that it can execute its business plan, there can be no assurance that;

a) increased sales necessary to obtain profitability will materialize, and

b) the Company will be able to raise sufficient cash to fund the additional working capital requirements.

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)

2 Summary of Significant Accounting Policies

(A) Principals of Consolidation and Combination

The accompanying consolidated financial statements include the accounts of Peak Entertainment Limited, Jusco Toys Ltd, Jusco UK Ltd, Wembley Sportsmaster Ltd and Cameo Collectables Ltd after elimination of inter-company transactions and balances. Peak Entertainment Limited, Jusco Toys Ltd, Jusco UK Ltd,

Cameo Collectables Ltd and Wembley Sportsmaster Ltd are wholly-owned subsidiaries of Peak Entertainment Holdings, Inc.

Cameo Collectables Ltd was formed on August 20, 2002 and was owned by Wilfred and Paula Shorrocks until February 7, 2003 when Peak Entertainment Holdings, Inc acquired the whole of the share capital of Cameo Collectables Ltd. Prior to February 7, 2003 the financial statements of Cameo Collectables Ltd were combined with Peak Entertainment Holdings, Inc as both entities were under common control.

(B) Basis of Preparation

The financial statements have been prepared on a going concern basis, the validity of which depends upon future funding being available. The validity of the going concern concept is also dependent upon the continued support of the directors.

Should such support be withdrawn and funding not made available, the company may be unable to continue as a going concern. Adjustments would have to be made to reduce the value of assets to their recoverable amount to provide for any further liabilities which might arise and to reclassify fixed assets as current assets.

(C) Interim Financial Information

In the opinion of management, the interim financial information as of September 30, 2005 contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such periods. Results for interim periods are not necessarily indicative of results to be expected for an entire year.

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the consolidated financial statements, and the notes thereto, included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2004.

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)

2 Summary of Significant Accounting Policies (continued)

(D) Risks and Uncertainties

The entertainment/media industry is highly competitive. The Company competes with many companies, including larger, well capitalized companies that have significantly greater financial and other resources. The Company's success is dependent upon the appeal of its entertainment products. Consumer preferences with respect to entertainment products are continuously changing and are difficult to predict. Therefore, the Company's success will depend on its ability to redesign, restyle and extend the useful life of products and to develop, introduce and gain customer acceptance of new entertainment products. The Company's ability, or inability, to manage these risk factors could influence future financial and operating results.

(E) Revenue Recognition

The Company generates revenues from three distinct sources; the license fees generated from the production of television entertainment, character licensing and sales of character related consumer products. Revenue from the production of television entertainment is recognized in accordance with Statement of Position 00-2 "Accounting by Producers or Distributors of Film" Under this guidance, the Company recognizes revenue from the sale of television entertainment when all of the following conditions are met:

1. Persuasive evidence of a sale or licensing arrangement with a customer exists,

2. The television episode is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery,

3. The license period of the arrangement has begun and the customer can begin its exploitation, exhibition or sale, and

4. The arrangement fee is fixed or determinable.

Revenue from character licensing arrangements is recognized over the life of the agreement. Revenue from the sale of character related consumer products is recognized at the time of shipment when title of the products passes to the customer. Amounts received in advance are recorded as unearned revenue until the earnings process is complete.

(F) Intangible assets and amortization

Intangible assets are stated at cost less accumulated amortization and any provision for impairment. Amortization is provided on intangible fixed assets over their expected useful lives as follows:

Trade marks - 10 years Website development costs - 3 years

Licensing rights are amortised on a straight line basis over the term of the agreement, which range from 3 years - 20 years.

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
                                   (Unaudited)

2        Summary of Significant Accounting Policies (continued)

         (F)      Intangible assets and amortization (continued)

                  Web Site Development Costs

                  In March 2000, EITF No. 00-02, Accounting for Website
                  Development Costs, was issued which addresses how an entity
                  should account for costs incurred related to website
                  development. EITF 00-02 distinguishes between those costs
                  incurred during the development, application and
                  infrastructure development stage and those costs incurred
                  during the operating stage. The Company expenses all costs
                  incurred during the development and operating stages. The
                  Company evaluates costs incurred during the applications and
                  infrastructure development stage using the guidance in
                  Statement of Position (SOP) 98-1, "Accounting for the Costs of
                  Computer Software Developed or Obtained for Internal Use".

         (G)      Plant and equipment

                  Plant and equipment are stated at cost, net of accumulated
                  depreciation. Depreciation is provided on plant and equipment
                  over their expected useful lives as follows:

                  Fixtures & fittings                  -  10 years
                  Moulds and tooling                   -   5 years
                  Computer equipment & software        -   4 years

Costs associated with the repair and maintenance of plant and equipment are expensed as incurred.

(H) Film and television costs

The Company capitalizes the costs of developing film and television projects in accordance with Statement of Position 00-2 "Accounting by Producers or Distributors of Film" These costs will be amortized using the individual-film-forecast-computation method, which amortizes costs in the same ratio that current period actual revenue bears to estimated remaining unrecognized ultimate revenue at the beginning of the current fiscal year. The Company has recorded no amortization to date as revenue has yet to be recognized.

(I) Asset Impairment

The Company periodically evaluates the carrying value of long-lived assets when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such an asset is separately identifiable and is less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved.

(J) Cash Equivalents

For purposes of the statements of cash flows, all temporary investments purchased with a maturity of three months or less are considered to be cash equivalents. The Company maintains bank accounts in the United States of America, United Kingdom and Hong Kong.

10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)

2 Summary of Significant Accounting Policies (continued)

(K) Inventories

Inventory is valued at the lower of cost or market, with cost being determined on the first-in, first-out basis. The Company reviews the book value of slow-moving items, discounted product lines and individual products to determine if these items are properly valued. The Company identifies these items and assesses the ability to dispose of them at a price greater than cost. If it is determined that cost is less than market value, then cost is used for inventory valuation. If market value is less than cost, then the Company establishes a reserve for the amount required to value the inventory at the market value. It the Company is not able to achieve its expectations of the net realizable value of the inventory at its current value, the Company adjusts its reserve accordingly. Inventory is comprised entirely of finished goods.

(L) Foreign currencies

The Company uses the British Pound as its functional currency. Transactions denominated in foreign currencies are translated at the year-end rate with any differences recorded as foreign currency transaction gains and losses and are included in the determination of net income or loss. The Company has translated the financial statements into US Dollars. Accordingly, assets and liabilities are translated using the exchange rate in effect at the balance sheet date, while income and expenses are translated using average rates. Translation adjustments are reported as a separate component of stockholders' equity (deficit).

(M) Income taxes

Income taxes are provided based on the liability method of accounting pursuant to Statement of Financial Accounting Standards No 109 "Accounting for Income Taxes" ("SFAS 109"). In accordance with SFAS No 109, deferred tax assets are recognised for deductible temporary differences and operating loss carry forwards, and deferred tax liabilities are recognised for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

(N) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 reported period. Actual results could differ from such estimates.

11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)

2 Summary of Significant Accounting Policies (continued)

(O) Earnings Per Share

Earnings per share is based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity.

Basic and diluted earnings per share are the same during the quarter ended September 30, 2004 and 2005 as the impact of dilutive securities is antidilutive. There were 9,948,000 warrants to purchase shares of the Company's common stock outstanding as of September 30, 2005.

(P) Warrants

The Company issues warrants to purchase shares of its common stock in exchange for services and in combination with the sale of convertible debentures. The Company accounts for warrants issued in exchange for services in accordance with EITF 96-18 "Accounting for Equity Instruments that are Issued to other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services". The Company records expenses based on the fair value of the equity instruments. The Company measures the fair value of the equity instruments using the stock price and other measurement assumptions as of the earlier of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete.

The Company accounts for warrants issued in combination with convertible debentures in accordance with the provisions of EITF 00-27 "Application of EITF 98-5 to Certain Convertible Instruments". Under the provisions of EITF 00-27, the Company allocates the total proceeds received between the convertible debentures and the warrants based on their relative fair value at the date of issuance.

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)

2 Summary of Significant Accounting Policies (continued)

(Q) Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No 123, "Share-Based Payment" ("SFAS Statement 123R") which replaces SFAS No 123, "Accounting for Stock-Based Compensation," and supercedes APB Opinion No 25, "Accounting for Stock Issued to Employees." This statement requires that all share-based payments to employees be recognized in the financial statements based on their fair values on the date of grant. SFAS No 123R is effective as of the beginning of the first interim or annual reporting period that begins after December 31, 2005 and applies to all awards granted, modified, repurchased or cancelled after the effective date. The Company is evaluating the requirements of SFAS 123R and expects that its adoption will not have a material impact on the Company's consolidated results of operations and earnings per share.

3 Significant current assets and liabilities

Included within current assets and current liabilities are the following significant balances:

                             December 31,    September 30,
                                2004              2005
Other current assets

Prepaid consulting          $        -       $      158,320
Accrued royalty income            826,242           734,724
Other current assets               35,486           155,314
                        ----------------- -----------------
                            $     861,728    $    1,048,358
                        ================= =================

13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
                                   (Unaudited)

4        Advances from Factor

         On October 2, 2003 Cameo Collectables Limited entered into an invoice
         factoring agreement with Arbuthnot Commercial Finance Ltd ("ACF").
         Under the agreement, the Company identified receivables that it wanted
         to factor and submitted them to ACF. Once ACF approved the receivables
         that were submitted it purchased the receivables with recourse and
         invoiced the customers direct. ACF paid 100% of the invoice amount to a
         current account on the collection date. Customers paid ACF directly.

         ACF's financing charge of 1.75% of the total invoice amount was debited
         to the current account. The Company was entitled to withdraw any credit
         balance on the current account representing cleared funds.

         The Company accounted for this arrangement in accordance with Statement
         of Financial Accounting Standard No. 140 "Accounting for Transfers and
         Servicing of Financial Assets and Extinguishments of Liabilities."
         Under the agreement any invoice not paid 6 months after the date on
         which it was due to be paid can be re-sold back to the Company.
         Accordingly, the Company recorded the advances received as a liability
         until the customer invoice is paid in full. In addition, the Company
         recognized the interest charge in full at the time the initial advance
         was received. The assets of Cameo Collectables Limited are pledged as
         security to Arbuthnot Commercial Finance Limited.

         The above agreements ceased on the 21 January 2005.


5        Convertible debt

         On May 6, 2005, we entered into Securities Purchase Agreements with
         four accredited investors. Pursuant to the agreements, we sold a
         principal amount of $360,000 in 12% convertible debentures and 432,000
         common stock purchase warrants for gross proceeds of $360,000. The
         debentures mature in 270 days from May 6, 2005. The debentures may
         mature earlier upon future different funding by us of any dollar amount
         equaling 15% more than amounts closed pursuant to the private
         placement. The debentures accrue interest at the rate of 12% per year,
         compounded annually, and is payable at maturity. The principal amount
         of the debentures may be converted into shares of common stock at the
         conversion price of $0.30 per share. Any conversion at or prior to
         maturity date constitutes a waiver of all accrued interest on the
         debentures. The conversion price for the debentures may be adjusted
         downward for issuances of securities by us at prices below the lower of
         $.30 per common share, or fair market value for such securities as
         determined at the time of issuance. For late payment, there will be a
         cash penalty equal to 1.5% of the outstanding principal amount of the
         debentures, compounded monthly for each month that payment in full is
         not effected, up to a maximum cash penalty equal to 9% of the
         outstanding principal amount of the debentures, and, in addition, there
         will be monthly reduction in warrant exercise price of the warrants at
         the rate of 2.5% and up to a maximum of 20% reduction in the exercise
         price. The obligations of the Company under the debentures are secured
         by security interest rights in substantially all of the Company's
         assets, to the extent not already encumbered. Each of these investors
         agreed, except upon 75 days prior written notice, it may not convert
         the debentures or exercise the warrants for shares of common stock to
         the extent that such it would cause the investor to beneficially own
         4.9% or more of our then issued and outstanding common stock. The
         warrants are exercisable for five years at $0.50 per share. After the
         tenth consecutive business day in which the common stock trades at
         $3.00 or greater, the warrants become redeemable at $0.10 per warrant.
         The warrant holder is entitled to seek the registration of the
         underlying shares in registration statements filed by the Company in
         the future. We used the proceeds for general corporate purposes.

14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)

5        Convertible debt (continued)

         On August 10, 2005, we sold to one accredited investor a 10%
         convertible promissory note in the principal amount of $100,000 due
         November 8, 2005, and warrants to purchase 333,333 shares of common
         stock. Interest on the note is due at maturity. Interest is to accrue
         on the principal amount at a fixed simple rate of ten percent per year,
         calculated on the actual number of days elapsed on the basis of a 360
         day year. The principal amount and accrued interest on the note may be
         converted into shares of common stock at the conversion price of $0.30
         per share. The warrants are exercisable at a price of $0.30 per share
         until August 10, 2008. Our obligations under the note are protected by
         a subordinated lien on our intellectual property that is subordinate to
         the liens of prior lenders. We granted the investor certain piggyback
         registration rights with respect to the shares of common stock
         underlying the securities purchased, agreeing to seek registration of
         the eligible shares in a registration statement that we file at a
         future date. If we do not file a registration statement within a six
         month period, the holder is entitled to demand the filing of a
         registration statement covering the resale of the underlying shares of
         common stock. We used the proceeds for general corporate purposes.

         On August 22, 2005, we sold to one accredited investor a 10%
         convertible promissory note in the principal amount of $100,000 due
         November 21, 2005, and warrants to purchase 333,333 shares of common
         stock. Interest on the note is due at maturity. Interest is to accrue
         on the principal amount at a fixed simple rate of ten percent per year,
         calculated on the actual number of days elapsed on the basis of a 360
         day year. The principal amount and accrued interest on the note may be
         converted into shares of common stock at the conversion price of $0.30
         per share. The warrants are exercisable at a price of $0.30 per share
         until August 22, 2008. Our obligations under the note are protected by
         a subordinated lien on our intellectual property, that is subordinate
         to the liens of prior lenders. We granted the investor certain
         piggyback registration rights with respect to the shares of common
         stock underlying the securities purchased, agreeing to seek
         registration of the eligible shares in a registration statement that we
         file at a future date. If we do not file a registration statement
         within a six month period, the holder is entitled to demand the filing
         of a registration statement covering the resale of the underlying
         shares of common stock. We used the proceeds for general corporate
         purposes.

15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
                                   (Unaudited)

6        Transactions with related parties

         The relationship between the Company and its related parties are:

         Wilfred and Paula Shorrocks are deemed to be related parties as they
         are directors and shareholders of Peak Entertainment Holdings, Inc.

         Terence Herzog and Michael Schenkein are deemed to be related parties
         as they are principals of Agora Capital Partners Inc, a management
         consulting company. They were directors of Peak Entertainment Holdings,
         Inc. Terence Herzog is a shareholder of Peak Entertainment Holdings,
         Inc. In December 2004, Mr. Herzog and Mr. Schenkein resigned as
         directors of the Company.

         During the period the company had the following transactions with its
         related parties:

                  a)       Wilfred and Paula Shorrocks

                           As of December 31, 2004 and September 30, 2005 the
                           Company owed Wilfred and Paula Shorrocks $752,522 and
                           $551,215, respectively.

                           On March 24, 2004, the Company signed a promissory
                           note which established a repayment schedule for the
                           amounts advanced by the stockholders. The amount
                           advanced is to be repaid in installments of $25,000
                           on January 31, 2005, May 31, 2005, September 30,
                           2005, December 31, 2005, March 31, 2006 and September
                           30, 2006 and installments of $100,000 on March 31,
                           2007 and September 30, 2007, with any balance to be
                           repaid in full on January 31, 2008.

                           Interest accrues commencing July 1, 2005 on any
                           unpaid balance, at 8% per annum.

                           The promissory note provides for earlier repayment of
                           any unpaid balance subject to various future
                           financial results of the Company.

                           License agreement

                           On April 30, 2002, the Company entered into a license
                           agreement with Wilfred and Paula Shorrocks whereby
                           the Company acquired the exclusive rights to apply
                           various intellectual properties to the manufacture,
                           distribution and sale of products on a worldwide
                           basis. Under the terms of the agreement the Company
                           has undertaken to pay to Wilfred and Paula Shorrocks
                           a guaranteed minimum royalties amount of US
                           $1,000,000, with the agreement treated for accounting
                           purposes as due to expire on December 31, 2023. On
                           April 14, 2004, the Company entered into an amendment
                           of the license agreement which established a minimum
                           quarterly royalty payment of $12,500 beginning
                           September 30, 2004. This liability is included in
                           license fees payable and the related asset is
                           included in intangible assets.

16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)

6        Transactions with related parties (continued)

                           On February 25, 2002, the Company entered into a
                           license agreement for rights to Monsters In My Pocket
                           from Morrison Entertainment Group, Inc., in which
                           Wilfred and Paula Shorrocks were also parties.
                           Pursuant to the agreement, Wilfred and Paula
                           Shorrocks were individually entitled to a certain
                           percentage of the revenues. The Company was entitled
                           to 10% of the revenues from the United States, 35% of
                           the revenues from the United Kingdom, and 40% of the
                           revenues from other territories. Morrison
                           Entertainment Group was entitled to 60% of the
                           revenues from the United States, 32.5% of the
                           revenues from the United Kingdom, and 30% of the
                           revenues from other territories. The Shorrocks were
                           entitled to 30% of the revenues from the United
                           States, 32.5% of the revenues from the United
                           Kingdom, and 30% of the revenues from other
                           territories. The revenue allocation referred to
                           revenues from character and merchandise licensing and
                           sales activities, and the allocation was to be
                           adjusted for entertainment production financing
                           terms. In October 2004, Morrison Entertainment Group
                           sent the Company a notice terminating any and all
                           agreements with the Company. On December 22, 2004,
                           the Company entered into an agreement with Morrison
                           Entertainment Group, whereby the parties dissociated
                           the Company's Monster Quest property and products
                           from Morrison Entertainment Group's Monster In My
                           Pocket property and products. Any and all agreements
                           between the parties entered into prior to December
                           22, 2004, including license agreements, were
                           terminated.

7        Warrants

         On July 24, 2003, pursuant to a consulting agreement with POW!
         Entertainment LLC and Stan Lee, the Company issued to POW warrants to
         purchase 750,000 shares of the Company's common stock exercisable for
         five years at $0.35 per share in exchange for consulting services to be
         provided over a three year term. Warrants to purchase 375,000 shares of
         common stock vested upon execution of the consulting agreement, and the
         remaining warrants to purchase 375,000 shares of common stock vested on
         July 24, 2004. POW has the right to demand registration of the shares
         of common stock underlying the warrant at the Company's expense,
         although no demand had been received at the date of this report.

         The warrants have been valued using the Black-Scholes Option Model. The
         value of the warrants that vested immediately was $390,000 on the date
         of grant. The value of these warrants has been recorded as deferred
         professional fees and will be amortized to earnings ratably over the
         three year service period.

         The value of the warrants that were subject to future vesting, and
         vested on July 24, 2004, were determined at the end of each reporting
         period. The Company recorded the expense for each quarter based on the
         value of the warrants at the end of each reporting period. For the
         quarter ended June 30, 2004, the Company recorded an expense of $10,918
         related to these warrants, and for the six months ended June 30, 2004,
         the Company recorded an expense of $9,295.

         On July 15, 2003, pursuant to a consulting agreement with Mr Jack
         Kuessous, the Company issued to Mr Kuessous warrants to purchase
         240,000 shares of the Company's common stock with an exercise price of
         $1.20 per share in exchange for consulting services over a one year
         period. The warrants vested immediately upon execution of the
         consulting agreement. The warrants have been valued using the
         Black-Scholes Option Model and had a value of $263,983 on the date of
         grant. The value of these options has been recorded as a current asset
         and has been fully amortized to earnings.

17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
                                   (Unaudited)

7        Warrants (continued)

         On December 17, 2003, the exercise price of the warrants held by Mr.
         Kuessous was changed from $1.20 per share to $0.50 per share. The
         amount to be expensed over the remaining service period related to the
         $1.20 warrants was the remaining unamortized fair value of the $0.50
         warrants as of December 17, 2003, plus the amount by which the fair
         value of the $1.20 warrants valued as of December 17, 2003 was greater
         than the fair value of the $0.50 warrants immediately before the terms
         were modified. The Company used the Black-Scholes Option Model and
         determined that the value of the $0.50 warrants immediately prior to
         the conversion of the terms was essentially the same as the $1.20
         warrants granted on December 17, 2003. Accordingly, the Company has now
         fully amortized the original value of $263,983.

         In July 2003, Mr Kuessous advanced the Company $100,000 On December 17,
         2003, the Company entered into a "Cancellation of Debt in Exchange for
         Securities Agreement", whereby Mr Kuessous cancelled the $100,000 owed
         to him by the Company in exchange for 583,333 shares of common stock of
         the Company and 150,000 common stock purchase warrants with an exercise
         price of $0.50 per share. The warrants vested immediately and are
         exercisable over a three year period. The warrants have been valued
         using the Black-Scholes Option Model and had a value of $79,449 at the
         date of grant and the common stock had a value of $332,500 on the date
         of issuance. The total value of the common stock and warrants is
         $411,995 and was compared with the $100,000 carrying value of the
         advances, resulting in an additional expense of $311,995, which was
         included in selling, general and administrative expenses in 2003.

         On January 5, 2004, the Company completed a "Settlement Agreement and
         Release" with former holders of 12% convertible debentures. Under the
         agreement, the Company exchanged $1,000,000 and 1,000,000 shares of
         unregistered common stock in return for the surrender of an aggregate
         of $215,000 principal amount of 12% convertible debentures, accrued
         interest and warrants to purchase 645,000 shares of common stock,
         issued pursuant to a "Securities Purchase Agreement" dated as of
         February 28, 2002, and an aggregate of $785,000 principal amount of 12%
         convertible debentures, accrued interest and warrants to purchase
         1,570,000 shares of common stock, issued pursuant to a "Securities
         Purchase Agreement" dated as of April 22, 2003. The $1,000,000
         consisted of $500,000 paid on January 5, 2004 and $500,000 in
         promissory notes, which was subsequently paid on March 22, 2004. The
         agreement provided that, after a period of thirteen months from January
         2004, all of the 1,000,000 shares of common stock still owned at that
         time by the former debenture holders may be put to the Company at a
         price $0.75 per share, on an all-or-none basis, for a one month period.
         The Company also paid for $10,000 of the former debenture holders'
         legal fees and expenses in connection with the transaction.

         The Company accounted for this transaction in accordance with EITF
         00-27 "Application of Issue 98-5 to Certain Convertible Instruments".
         Accordingly, the Company first allocated the consideration paid based
         on the fair value of the warrants to be repurchased and the beneficial
         conversion features as of January 5, 2004. Any remaining consideration
         was used to offset the carrying value of the convertible debentures and
         accrued interest and resulted in a gain on the extinguishment of the
         debt. The Company determined that the fair value of the warrants to be
         repurchased and the beneficial conversion features at January 5, 2004
         exceeded the total consideration to be paid of $1,580,000. Accordingly,
         the Company recorded a gain on the extinguishment of the convertible
         debentures and accrued interest. In accordance with FAS 133, the
         1,000,000 shares of common stock are considered an embedded derivative
         instrument and recorded as equity.

18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
                                   (Unaudited)

7        Warrants (continued)

         On January 5, 2004, the Company entered into "Securities Purchase
         Agreements" with four accredited investors. Pursuant to the agreements,
         the Company sold $1,500,000 in 8% convertible debentures due January 5,
         2007 and 3,000,000 common stock purchase warrants, exercisable for five
         years at $0.50 per share. The purchase price totalled $1,500,000, of
         which $750,000 was paid in cash, and $750,000 by promissory notes. The
         principal amount of the debentures, plus any accrued and unpaid
         interest on the debentures may be converted into shares of common stock
         at the conversion price of $0.30 per share. The conversion price may be
         adjusted downward for issuances of securities by the Company at prices
         below the lower of $0.50 per common share, or fair market value for
         such securities as determined at the time of issuance. Annual interest
         payments on the debentures are due on January 7 of each year,
         commencing January 7, 2005. At the option of the Company, interest
         payments may be accrued beyond the annual interest payment date, in
         which event the debenture holder shall have the option to accrue the
         interest payment then due for another interest payment period, or cause
         the Company to issue common stock in exchange for interest. Unless upon
         75 days prior written notice, the debenture and warrant holder may not
         convert the debentures or warrants for shares of common stock to the
         extent that such conversion would cause it to beneficially own 4.9% or
         more of our then issued and outstanding common stock. After the tenth
         consecutive business day in which the common stock trades at $3.00 or
         greater, the warrants become redeemable at $0.10 per warrant.

         The warrants have been valued using the Black-Scholes Option Model at a
         value of $1,649,901 at the date of grant. A discount of the full amount
         of the debt was recorded and will be amortized over the life of the
         debt of approximately 3 years.

         During the quarter ended September 30, 2004, $541,000 of the 8%
         convertible debentures was converted at $0.30 per share into 1,805,000
         shares of common stock. A loss on conversion of $481,395 was recognized
         during that quarter.

         On January 23, 2004, the Company entered into an agreement for services
         to be provided over twelve months with Vintage Filings, LLC. It issued
         300,000 common stock purchase warrants, which vested immediately and
         are exercisable for three years at $0.50 per share pursuant to the
         agreement. The warrants have been valued using the Black-Scholes Option
         Pricing Model and have a value of $224,988 at the date of grant. The
         value of the warrants will be amortized over the twelve month service
         period.

         On January 29, 2004, the Company entered into a "Securities Purchase
         Agreement" with Shai Stern. Pursuant to the agreement, it issued
         $50,000 in 8% convertible debentures due January 29, 2007 and 100,000
         common stock purchase warrants. The principal amount of the debentures,
         plus any accrued and unpaid interest on the debentures, may be
         converted into shares of common stock at the conversion price of $0.30
         per share. Annual interest payments on the debenture are due on January
         29 of each year, commencing with January 29, 2005. At the option of the
         Company interest payments may be accrued beyond the annual interest
         payment date, in which event the debenture holder shall have the option
         to accrue the interest payment then due for another interest payment
         period, or cause the Company to issue common stock in exchange for
         interest. The warrants are exercisable for three years at a price of
         $0.50 per share. After the tenth consecutive business day in which the
         common stock trades at $3.00 or greater, the warrants become redeemable
         at $0.10 per warrant.

19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
                                   (Unaudited)

7        Warrants (continued)

         The warrants have been valued using the Black-Scholes Option Pricing
         Model and have a value of $51,997 at the date of grant. The Company has
         recorded these debentures and warrants in accordance with the
         provisions of EITF 00-27 "Application of Issue 98-5 to Certain
         Convertible Instruments". Under the provisions of EITF 00-27, the
         Company has allocated the total proceeds received between the
         convertible debentures and the warrants based on their relative fair
         value at the date of issuance. The Company has then estimated the
         intrinsic value of the beneficial conversion feature. The Company has
         determined that the intrinsic value of the beneficial conversion
         feature exceeds the face value of the debt and accordingly, the Company
         has recorded a debt discount of $50,000. The debt discount will be
         amortized as interest expense over the life of the debentures, which is
         three years.

         On September 28, 2004, the Company entered into a "Securities Purchase
         Agreement" with three accredited persons. Pursuant to the agreements,
         the Company sold 1,666,666 shares of common stock and 1,750,000 common
         stock purchase warrants, exercisable for three years at $0.50 per
         share, for an aggregate purchase price of $500,000.

         Prior to the termination date, the warrant shall be callable, under the
         circumstances described below, at the discretion of the company, for
         $0.10 per warrant. The Company's right to call shall be exercisable
         commencing upon the day following the tenth consecutive business day
         during which the Company's common stock has traded at prices of, or in
         excess of, $1.75 per share, subject to adjustment for stock splits,
         dividends, subdivisions, reclassification and the like, with weekly
         volume of such trading being in excess of the total number of shares
         represented by this warrant. In the event the Company exercises its
         right to call the warrants, the Company shall give the Holder written
         notice of such decision. In the event that the Holder does not exercise
         all or any part of the warrants or the Company does not receive the
         warrant from the Holder within 30 days from the date on the notice to
         the Holder of the Company's intension to redeem the warrant, then the
         warrant shall be deemed canceled, and the holder shall not be entitled
         to further exercise thereof or to the redemption fee.

         The value of the stock and warrants is made more difficult due to the
         call provision of the warrant, which reduces the value of the warrant.
         The Company recognizes that due to the call provision it is
         inappropriate to value the warrant using the Black-Scholes Option
         Model. The Company has calculated the fair value of the common stock at
         a price of $0.21 per share, being the trading price at September 28,
         2004. The remaining proceeds of $150,000 have been allocated as the
         value of the warrants at the date of the grant.

         On January 4, 2005, the Company entered into a consulting agreement
         with Salvani Investments, pursuant to which it issued 1,000,000
         warrants, exercisable for 5 years at $0.50 per share, in exchange for
         business consulting and investor relations services. The warrants have
         been valued using the Black-Scholes option model at a value of
         $298,831.08 at the date of grant. The value of these warrants has been
         recorded as deferred professional fees and will be amortized to
         earnings ratably over one year.

         On January 5, 2005, the Company sold to Dan Brecher 250,000 warrants,
         exercisable for three years at $0.50 per share, for $2,500. These
         warrants were valued by using the Black-Scholes option model at a value
         of $74,707.77 at the date of grant. The value of these warrants has
         been recorded as an expense to non cash legal fees.

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
                                   (Unaudited)

7        Warrants (continued)

         On March 1, 2005, the Company entered into a loan agreement for
         $500,000 with Tayside Trading Ltd. Pursuant to the loan agreement, the
         Company issued 500,000 warrants, exercisable for five years at $0.50
         per share, to the lender. The Company also granted the lender an option
         exercisable commencing with the date of return of the $500,000 and
         expiring two weeks thereafter, to acquire, at the purchase price of
         $100,000, (i) shares of the Company's common stock at $0.30 per share
         (333,333 shares) and (ii) warrants to purchase 200,000 shares of common
         stock, exercisable for five years at $0.50 per share. These warrants
         have been valued using the Black-Scholes option pricing model at a
         value of $184,377.11 at the date of grant. The value of these warrants
         has been recorded as an expense to non cash finance charges.

         On March 2, 2005, the Company issued 50,000 warrants, exercisable for
         five years at $0.50 per share, to Aaron M. Lasry in return for business
         consulting services. These warrants have been valued using the
         Black-Scholes option pricing model at a value of $17,438.74 at the date
         of Grant and has been recorded in non cash compensation.

8        Stockholders' Equity

         On February 11, 2004, the Company entered into a financial advisor
         agreement with Ameristar International Capital, Inc. It issued 100,000
         shares of common stock as an initial equity fee pursuant to the
         agreement. These shares had a fair value of $43,000 at the date of
         grant. The Company has recorded the value of the common stock as an
         expense, as there is no continuing benefit.

         In 2003, the Company entered into an agreement with William Ivers in
         connection with business consulting services, relating to the
         preparation of a written business plan rendered by Mr Ivers. In
         exchange for these services, the Company agreed to pay $19,012 in cash
         and issue 16,667 shares of common stock at a future date. On February
         12, 2004, the Company issued 16,667 shares of common stock to Mr Ivers
         at a value of $8,333 at the date of grant. Accordingly, the Company
         expensed the value of the shares at December 31, 2003 and recorded a
         corresponding liability.

         In 2003, the Company entered into an agreement with Lou Schneider in
         connection with business consulting services, related to establishing
         potential apparel-related licensing relationships with third parties,
         rendered by Mr Schneider. In exchange for these services, the Company
         agreed to issue 20,000 shares of common stock at a future date. On
         February 12, 2004, the Company issued 20,000 shares of common stock to
         Mr Schneider at a value of $10,000 at the date of grant. Accordingly,
         the Company expensed the value of the shares at December 31, 2003 and
         recorded a corresponding liability.

         In 2003, the Company entered into an agreement with Rolin Inc to
         provide financial advisory services in exchange for common stock of the
         Company. On February 12, 2004, the Company issued an aggregate of
         20,409 shares of common stock to Rolin Inc. These shares had a fair
         value of $10,204 at the date of grant. The Company has recorded the
         transaction as professional fees expensed in the quarter ended March
         31, 2004.

         On March 10, 2004, the Company entered into "Securities Purchase
         Agreements" with eleven accredited investors. Pursuant to the
         agreements, the Company sold an aggregate of 1,000,000 shares of common
         stock and 600,000 common stock purchase warrants, exercisable for three
         years at $0.75 per share, for a total purchase price of $500,000.

21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2005
                                   (Unaudited)

8        Stockholders' Equity (continued)

         Legend Merchant Group, Inc acted as the placement agent for the above
         transaction. All of the purchasers were pre-existing customers of
         Legend Merchant Group. The Company paid Legend a fee of $25,000, and
         100,000 common stock purchase warrants exercisable for three years at
         $0.50 per share and 60,000 common stock purchase warrants exercisable
         for three years at $0.75 per share, for its services. The warrants have
         been valued using the Black-Scholes Option Pricing Model and have a
         value of $92,794 at the date of grant which was March 10, 2004 The
         total fee of $117,744 has been offset against the proceeds of the
         offering.

         On April 28, 2004, the Company entered into an agreement with Laura
         Wellington, whereby it exchanged a debt of $250,000 owed to Ms
         Wellington for 500,000 shares of common stock. Ms Wellington had loaned
         $250,000 to the company in November 2003. The total value of the common
         stock at the date of grant was $250,000 compared with the $250,000
         carrying value of the advance, so there was no additional expense.

         On July 23, 2004, the Company entered into an agreement with Laura
         Wellington, whereby it exchanged a debt of $194,000 owed to Ms
         Wellington for 388,000 shares of common stock. The total value of the
         common stock at the date of the grant was $194,000 compared with the
         $194,000 carrying value of the debt, so there was no additional
         expense.

         On August 17, 2004, the Company issued 75,001 shares to Portfolio PR in
         connection with professional services provided. The shares had a value
         of $18,750 at the date of the grant. The Company expensed $36,000 as
         professional fees during the quarter, being the value of professional
         services received, and recognized a profit of $17,250 on issue of the
         shares.

         On September 1, 2004, the Company entered into a consultancy agreement
         with CEOcast, Inc. to provide consultancy services for a six month
         period commencing September 1, 2004, in exchange for 400,000 shares of
         common stock of the Company. These shares had a value of $44,000 at the
         date of grant.

         In April and June 2005, the Company issued 212,765 shares of restricted
         common stock to Crescent Fund, LLC in return for financial consulting
         services. These shares were valued at $96,276 based on the fair market
         value of the stock on the date of grant.

         In May 2005, the Company issued 78,397 shares of restricted common
         stock to Dan Brecher for the conversion of accrued interest.

         In June 2005, the Company issued 157,991 shares of restricted stock to
         Platinum Partners for the conversion of accrued interest on outstanding
         debentures.


9        Subsequent Events

         On October 1, 2005, we entered into a consulting agreement with
         CEOcast, Inc., pursuant to which we agreed to issue 200,000 shares of
         our common stock in connection with the agreement, and 182,000 shares
         of common stock in connection with balance due under a prior agreement
         with CEOcast dated September 1, 2004. The agreement is for a term of
         six months.

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)

9 Subsequent Events (continued)

In October 2005, we sold to three accredited investors 30,000 units of our securities for $300,000. Each unit, at a price of $10,000, consists of: (i) a 12% $10,000 convertible debenture, convertible into shares of common stock at $0.30 per share, and (ii) warrants to purchase 25,000 shares of the Company's common stock. Interest on the principal amount of the debenture will accrue at the simple interest rate of 12% per year computed on the basis of a 360 day year. Interest is payable at maturity in cash. The debenture will mature in 18 months from issue, unless earlier due. The debentures are secured by assets of our company, to the extent not already encumbered. We agreed not to grant any other person, after the closing upon the private placement pursuant to which the units were offered, a priority security interest in its assets for so long as the debentures remain outstanding, except with the consent of 2/3 of the outstanding face amount of holders of the debentures. Consent of a two-thirds majority of the holders of our debentures will be required for (i) any sale by the company of substantially all of our assets unless the proceeds of such sale are used to repay the debentures, (ii) any merger of the company with another entity, where we are not the surviving corporation, unless as part of such transaction the debentures will be repaid, or (iii) certain other actions materially affecting the debentures that require approval of the debenture holders under the corporations laws of the State of Nevada. The warrants will be exercisable for a period of five years into shares of common stock at $0.30 per share. We granted the investor certain piggyback registration rights with respect to the shares of common stock underlying the warrants purchased, agreeing to seek registration of the eligible shares in a registration statement that we file at a future date. We used the proceeds for general corporate purposes.

23

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR RESULTS OF OPERATIONS

"FORWARD-LOOKING" INFORMATION

This report on Form 10-QSB contains certain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which represent our expectations and beliefs, including, but not limited to statements concerning the Company's expected growth. The words "believe," "expect," "anticipate," "estimate," "project," and similar expressions identify forward-looking statements, which speak only as of the date such statement was made. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors.

Introductory Statement

Our current business plan is centered on the production of television shows geared for the children's entertainment market. Once our planned television shows are produced, we believe that we can generate revenue through the sale of broadcast rights of those shows. We also intend to license intellectual property rights created from the television shows and offer for sale merchandise related to the television shows.

We have not generated significant revenues in this period because we had not yet funded the television shows upon which we plan our exploitation of the related intellectual rights portfolio. Our ability to convert current negotiations to executed contracts is dependent upon such progress with the television shows. We have delayed the production of the associated toys and merchandise for the television shows, and this has compromised our ability to generate sales in these areas.

The following discussion and analysis should be read in conjunction with the information set forth in the audited financial statements for the year ended December 31, 2004.

With limited available capital, we have produced initial episodes of our planned television shows and we believe that we will now be viewed more favorably by potential capital sources and believe that we should have better success in raising much needed capital to fund full production of the planned television shows.

Further, we have diversified the way in which we seek to finance some of our television show production budgets, and during this year we have focused on third party co-production financing. The delay in obtaining from, and limited capital provided by, third party co-production financiers has delayed our planned production timetable, but has been successful in significantly reducing the internal cash expenditure of Peak.

We have entered into an agreement with Maverick Entertainment Group Plc., and have certain exploitation rights to certain of its intellectual property: Muffin the Mule and Snailsbury Tails, both of which the British Broadcasting Corporation commissioned television episodes. Peak expects to exploit these television shows aggressively in 2005 and anticipate increased revenues via their licensing and manufacturing divisions as a result. We, and third party financiers, have financed over $1,600,000 for the production of The Wumblers, and we are expecting to finance the balance of the production budget ($1,900,000) with the support of Silly Goose Company and third parties.

The Wumblers has been licensed to 4Kids Entertainment LLC for broadcast, home entertainment (video/DVD), licensing and merchandising rights in the United States, and we expect to utilize 4Kids Entertainment's prominence in the industry to market and promote The Wumblers.

We have still yet to raise the requisite capital for the television shows in order to complete production in earnest and it is still a factor that until we raise sufficient capital to produce the planned television shows, we do not expect to generate any significant revenues from any of our lines of business. If we are is unable to raise capital to produce its television shows, we intend to alter our business plan to focus on licensing our intellectual property to third parties, and on the sale of toys and consumer goods.

24

Business

Our business operations are primarily in three areas of the children's entertainment and leisure market: production of television shows; licensing of entertainment concepts and characters; and sale of merchandise products. Since inception, we have not generated significant revenues and we will require substantial working capital to execute our business plan.

Our current business plan is centered on the production of television shows geared for the children's entertainment market. Once our planned television shows are produced, we believe that we will be able to generate revenue through the sale of broadcast rights of those shows. We also intend to license intellectual property rights created from the television shows and offer for sale merchandise related to the television shows.

Until we raise sufficient capital to produce our planned television shows, we do not expect to generate any significant revenues from any of our lines of business. If we are unable to raise capital to produce our planned television shows, we intend to alter our business plan to focus on licensing intellectual property to third parties, and on the sale of toys and other consumer goods.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

Revenues

Consolidated net revenues increased 340% to $1,090,688 and 216% to $437,908 for the nine months and three months ended September 30, 2005 as compared to 2004.

In 2004 and continued into 2005, we were primarily focused on the raising of capital, and the sales of inventory along with products launched in 2003 that were short-term cash generating projects. Our intention is to begin aggressively marketing toy products associated with television projects once adequate financing has been obtained for the production of the television shows. We have negotiated various representation agreements with licensees, and attended worldwide trade shows and retail presentations to raise the profile of our products in order to seed the markets in anticipation of the television show launches.

We are still in the early production stages of two television shows, and we expect to remain in the production stages of the shows through 2005 and into 2006. Until we have completed production of the shows and are in a position to generate revenues from the sales of broadcast rights for the shows, we do not have an adequate basis for projecting revenues, nor identifying trends or demands. This applies for all main lines of our business, as our business plan is centered around the television shows.

Cost of Revenue

For the nine and three months ended September 30, 2005 cost of revenues was $191,926 and $76,743, respectively, as compared to $186,332 and $101,418 for the same periods in 2004. Cost of revenues as a percentage of revenues decreased to 18% for the nine and three months ended September 30, 2005, respectively, as compared to 75% and 73% for the same periods in 2004. Cost of revenue is primarily made up of inventory, transport and royalties due on licenses.

We anticipate that our cost of revenue with respect to income from entertainment and consumer products will increase significantly in 2005 as we enter into the production stages of more television show episodes and increased marketing efforts for the sale of consumer goods. It is anticipated that the cost of revenue for our television shows will initially increase in relation to our entertainment revenues, until such time that the television episodes are completed, at which time the significant costs will have been incurred Since costs for entertainment comprise mostly of non-recurring episode production costs, we expect such costs to decrease as a percentage of revenues as we distribute the shows and generate revenues from more and more markets. It is anticipated that the cost of revenue for our consumer products will increase in direct relation to an increase in revenues.

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Operating Expenses

Selling, General and Administrative Expenses. Selling, general and administrative costs were $1,811,702 and $641,973 for the nine and three months ended September 30, 2005, respectively, compared to $2,104,581 and $505,452 for the nine and three months ended June 30, 2004. Selling, general and administrative costs decreased by 14% for the nine ended September 30, 2005, respectively, as compared to the - nine months ended June 30, 2004. This decline represents management focus on controlling spending. The significant and noteworthy expenses were principally costs incurred from legal, accounting and other professional services related to the ongoing SEC filings and investment within the company. Such costs have been a significant factor affecting the business operations at a time when we lack sufficient revenues from operations to finance the production of our television shows and rely upon financing from third parties. We will continue to incur such expenses in 2005 as the company is in the financing stages of its animation projects and general investment into the company. We anticipate that expenses for legal, accounting and other professional services will continue to be a significant factor during 2005, due to our continuing need to raise capital and our securities law reporting obligations as a publicly-held company.

Non-cash expense

Non cash expense for the nine and three months ended September 30, 2005 was $1,854,127 and $431,990, respectively, as compared to $339,392 and $87,136 for the same periods in 2004, an increase of $1,514,735 and $1,486,873. The increase in non cash expense is primarily related to the Company increased efforts to raise capital for its operations.

LIQUIDITY AND CAPITAL RESOURCES

Cash Requirements

Our revenues have been insufficient to cover our operating expenses. Since inception, we have been dependent on loans from the Company's officers and on private placements of the Company's securities in order to sustain operations.

Management expects to satisfy our liquidity needs on a short-term basis through private placements of the Company's securities, including the issuance of debt. There can be no assurances that the proceeds from private placements or other capital transactions will continue to be available, that revenues will increase to meet our cash needs, that a sufficient amount of our securities can or will be sold, or that any common stock purchase options/warrants will be exercised to fund our operating needs.

We rely on short-term outside funding to meet our short-term liquidity needs, as the internal cash flows generated by sales of our toys and gift products have been insufficient to fully meet our short-term liquidity needs. We anticipate that in fiscal year 2006, we will be in position to meet our short-term and long-term liquidity needs through the internal cash flows generated from broadcast sales from our current entertainment projects, Monster Quest and The Wumblers, which are scheduled for production in late 2005 to early 2006. Because our current operations did not generate any significant revenues and our principal planned products are still in production stages, we are in constant need of cash to pay for our ordinary operating expenses, and more significantly, to pay for the production costs of three projects currently in various stages of production. Accordingly, until our entertainment projects can be funded and full television production activities commenced, we will continue to rely on short-term outside funding. If we are unable to obtain funding for the projects, we may be forced to curtail or terminate operations.

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Sources and Uses of Cash

To date, the Company has financed its operations primarily through the sale of equity securities and debt. At September 30, 2005, we had no cash and used approximately $521,000 to fund our operations and net loss for the nine months ended September 30, 2005. The Company's consolidated financial statements for December 31, 2004 had been prepared on the assumption that the Company will continue as a going concern. The Company's independent auditors issued there audit report for the December 31, 2004 financial statements dated May 16, 2005 that includes an explanatory paragraph stating that the Company's recurring losses and accumulated deficit, among other things, raised substantial doubt about the Company's ability to continue as a going concern. The Company's historical sales have never been sufficient to cover its expenses and it has been necessary to rely upon financing from the sale of equity securities and debt to sustain operations. The Company's ultimate future capital requirements will depend on many factors, including cash flow from operations, customer acquisition, and the Company's ability to successfully market its products.

Management expects to satisfy our liquidity needs on a short-term basis through the continuing support of the directors, outside financings, and the subsequent expected sales growth from our various company activities. We anticipate meeting our long-term liquidity needs through the internal cash flows generated by ongoing sales growth from projects such as our current entertainment project Monster Quest. Furthermore, we will attempt to limit our long-term liquidity needs through the continuance of cost control measures applied to our operations.

Sources and Uses of Cash from Operating Activities

For the nine months ended September 30, 2005, cash flows from operating activities resulted in negative cash flows of $521,000. The net loss of $3,382,662, increase in accounts receivable by $403,981 and other assets by $186,630 were offset by non-cash charges of $3,076,000 for depreciation, amortization of intangible assets, amortization of discount on debentures, non-cash professional and consulting fees.

Sources and Uses of Cash from Investing Activities

Cash flows from investing activities resulted in positive cash flows of approximately $396,000 for the nine months ended September 30, 2005, as compared to cash used of $895,000 in 2004. In the nine months ended September 30, 2005 we raised $560,000 of cash from debt and purchased $36,000 in equipment and $128,000 to purchase intangibles. In 2005, our focus will be on production and investment in new product licenses from third parties. We may expend significant resources in investing activities in 2005.

Sources and Uses of Cash from Financing Activities

Cash flows from financing activities resulted in positive cash flows of $8,000 for the nine months ended September 30, 2005, compared to same period in 2004 of negative $263,000. In 2005, we intend to continue to rely upon capital raised from third party investors in private placements to fund our operations, as well as any entertainment production financing partners we can obtain. Entertainment production financing partners will share in the proceeds of the sale of the produced product.

In 2005, we intend to continue to rely upon capital raised from third party investors in private placements to fund the Company's operations, as well as any entertainment production financing partners we can obtain. Entertainment production financing partners will share in the proceeds of the sale of the produced product.

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Sales of Securities in 2005

On January 29, 2004, we entered into a Securities Purchase Agreement with an individual investor. Pursuant to the agreement, we sold $50,000 in 8% convertible debentures due January 29, 2007 and 100,000 common stock purchase warrants. The purchase price was $50,000. The principal amount of the debentures, plus any accrued and unpaid interest on the debentures may be converted into shares of common stock at the conversion price of $0.30 per share. Annual interest payments on the debentures are due on January 29 of each year, commencing January 29, 2005. At our option, interest payments may be accrued beyond the annual interest payment date, in which event the debenture holder shall have the option to accrue the interest payment then due to another interest payment period, or cause us to issue common stock in exchange for interest. We used the proceeds for working capital purposes. On January 26, 2005, the investor converted these $50,000 in debentures, plus $4,000 in accrued interest, into an aggregate of 180,000 shares.

On May 6, 2005, we entered into Securities Purchase Agreements with four accredited investors. Pursuant to the agreements, we sold a principal amount of $360,000 in 12% convertible debentures and 432,000 common stock purchase warrants for gross proceeds of $360,000. The debentures mature in 270 days from May 6, 2005. The debentures may mature earlier upon future different funding by us of any dollar amount equaling 15% more than amounts closed pursuant to the private placement. The debentures accrue interest at the rate of 12% per year, compounded annually, and is payable at maturity. The principal amount of the debentures may be converted into shares of common stock at the conversion price of $0.30 per share. Any conversion at or prior to maturity date constitutes a waiver of all accrued interest on the debentures. The conversion price for the debentures may be adjusted downward for issuances of securities by us at prices below the lower of $.30 per common share, or fair market value for such securities as determined at the time of issuance. For late payment, there will be a cash penalty equal to 1.5% of the outstanding principal amount of the debentures, compounded monthly for each month that payment in full is not effected, up to a maximum cash penalty equal to 9% of the outstanding principal amount of the debentures, and, in addition, there will be monthly reduction in warrant exercise price of the warrants at the rate of 2.5% and up to a maximum of 20% reduction in the exercise price. The obligations of the Company under the debentures are secured by security interest rights in substantially all of the Company's assets, to the extent not already encumbered. Each of these investors agreed, except upon 75 days prior written notice, it may not convert the debentures or exercise the warrants for shares of common stock to the extent that such it would cause the investor to beneficially own 4.9% or more of our then issued and outstanding common stock.

On August 10, 2005, we sold to one accredited investor a 10% convertible promissory note in the principal amount of $100,000 due November 8, 2005, and warrants to purchase 333,333 shares of common stock. Interest on the note is due at maturity. Interest is to accrue on the principal amount at a fixed simple rate of ten percent per year, calculated on the actual number of days elapsed on the basis of a 360 day year. The principal amount and accrued interest on the note may be converted into shares of common stock at the conversion price of $0.30 per share. The warrants are exercisable at a price of $0.30 per share until August 10, 2008. The obligations of the Company under the note are protected by a subordinated lien on our intellectual property, that is subordinate to the liens of prior lenders. We used the proceeds for general corporate purposes.

On August 22, 2005, we sold to one accredited investor a 10% convertible promissory note in the principal amount of $100,000 due November 21, 2005, and warrants to purchase 333,333 shares of common stock. Interest on the note is due at maturity. Interest is to accrue on the principal amount at a fixed simple rate of ten percent per year, calculated on the actual number of days elapsed on the basis of a 360 day year. The principal amount and accrued interest on the note may be converted into shares of common stock at the conversion price of $0.30 per share. The warrants are exercisable at a price of $0.30 per share until August 22, 2008. The obligations of the Company under the note are protected by a subordinated lien on our intellectual property, that is subordinate to the liens of prior lenders. We used the proceeds for general corporate purposes.

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CASH MANAGEMENT

The Company will use its cash to meet certain expenses necessary to operate, such as payment of employee salaries, taxes, and ordinary business expenses such as office rent. The Company will also use cash to make payments on short term borrowings, contractually obligated payments on license arrangements and other accounts payable, although the Company will seek to renegotiate the timing and payment schedule of certain license arrangements.

After paying for ordinary expenses, to the extent that the Company has available cash, including cash received from financing arrangements, significantly all of its cash will be applied to the production of the television episodes. We have been in negotiations with co-production partners for all of our television episodes. The total cost of each show will be formalized by way of a cash flow budget, payable over a period of 12 to 36 months. This will be monitored in detail. It will be a requirement of any of our partners to supply us with an actual budget statement on a monthly basis compared to the agreed budget. It is imperative that the Company does not increase the budget by significant amounts and that it tries to keep within the budget as much as it can. We have implemented tight procedures to ensure that the cash management has sufficient controls.

PLAN OF OPERATIONS TO ADDRESS GOING CONCERN

In its report dated May 16, 2005, the independent registered public accounting firm stated that our financial statements for the year ended December 31, 2004 were prepared assuming that we would continue as a going concern. Our ability to continue, as a going concern is an issue raised as a result of historical losses from operations, cash flow deficits and a net capital deficiency. As a result of the foregoing, the auditors have expressed substantial doubt about our ability to continue as a going concern.

We continue to experience net operating losses. Our ability to continue as a going concern is subject to our ability to generate a profit or obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, increasing sales or obtaining loans from various financial institutions where possible. Our continued net operating losses and stockholders' deficit increases the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.

The primary issues management will focus on in the immediate future to address this matter include:

o seeking institutional investors for equity investments;
o complete negotiations to secure short term financing through promissory notes or other debt instruments on an as needed basis;
o focusing on, and continue to expand, revenues, through sales of consumer products and pre-sales on our projects in development;
o renegotiate payments terms of existing contractual obligations;
o develop co-production financing opportunities for our entertainment projects;
o consider third-party licensing alliances for the products in our entertainment division; and
o seek acquisition and partnership opportunities with third party companies to expand our fully integrated media business.

To address these issues, in 2005, we have entered into agreements with various investment banking companies to assist us in raising capital. We have entered into a preliminary agreement with Maverick Entertainment Plc, and expect to enter into more formal discussions about potentially combining our businesses during 2005. We anticipate increased revenues from having our first completed TV series to exploit later in 2005 with Muffin the Mule. Further, we expect to generate pre-sales from the Wumblers in the second half of 2005 as the show is slated to launch in the US and other international territories in early 2006.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

This Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, intangible assets, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Certain significant accounting policies and estimates inherent in the preparation of our financial statements include policies and estimates with regards to revenue recognition, capitalization of film and television costs, and currency.

(1) Revenue Recognition.

Revenue from the production of television entertainment is recognized in accordance with Statement of Position 00-2 "Accounting by Producers or Distributors of Film." Under this guidance, the Company recognizes revenue from the sale of television entertainment when all of the following conditions are met:

(a) persuasive evidence of a sale or licensing arrangement with a customer exists,
(b) the television episode is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery,
(c) the license period of the arrangement has begun and the customer can begin its exploitation, exhibition or sale, and
(d) the arrangement fee is fixed or determinable.

While this accounting treatment has not been material in our past operations, from time to time, we expect to receive funds in advance to produce television show episodes, the production of which could take from one to three years. Advances received will not be recorded as revenues until the revenue recognition conditions are met.

Revenue from character licensing arrangements is recognized over the life of the agreement. Revenue from the sale of character related consumer products is recognized at the time of shipment when title of the products passes to the customer. Amounts received in advance are recorded as unearned revenue until the earnings process is complete.

(2) Film and Television Costs.

The Company capitalizes the costs of developing film and television projects in accordance with Statement of Position 00-2 "Accounting by Producers or Distributors of Film." These costs will be amortized using the individual-film-forecast-computation method, which amortizes costs in the same ratio that current period actual revenue bears to estimated remaining unrecognized ultimate revenue at the beginning of the current fiscal year. The Company has recorded no amortization to date as revenue has yet to be recognized.

(3) Functional currency and treatment of foreign currency translation.

Due to the majority of our operations being based in the United Kingdom, the British Pound has been selected as our functional currency.

Transactions denominated in foreign currencies are translated at the year-end rate with any differences recorded as foreign currency transaction gains and losses and are included in the determination of net income or loss. The Company has translated the financial statements into US Dollars. Accordingly, assets and liabilities are translated using the exchange rate in effect at the balance sheet date, while income and expenses are translated using average rates. Translation adjustments are reported as a separate component of stockholders' equity (deficit).

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RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No 123, "Share-Based Payment" ("SFAS Statement 123R") which replaces SFAS No 123, "Accounting for Stock-Based Compensation," and supersedes APB Opinion No 25, "Accounting for Stock Issued to Employees." This statement requires that all share-based payments to employees be recognized in the financial statements based on their fair values on the date of grant. SFAS No 123R is effective as of the beginning of the first interim or annual reporting period that begins after December 31, 2005 and applies to all awards granted, modified, repurchased or cancelled after the effective date. The Company is evaluating the requirements of SFAS 123R and expects that its adoption will not have a material impact on the Company's consolidated results of operations and earnings per share.

In December 2004, the FASB issued SFAS No 153, "Exchanges of Nonmonetary Assets
- an Amendment of APB Opinion No 29" (SFAS 153). SFAS 153 eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS 153 is effective for fiscal years beginning after June 15, 2005 and is required to be adopted by the Company in the first quarter of 2006. The Company does not believe that the adoption of SFAS 153 will have a material impact on the Company's consolidated results of operations or financial condition.

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ITEM 3. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15a-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this report, are effective in providing reasonable assurance that the information required to be disclosed in this report has been recorded, processed, summarized and reported, on a timely basis, as of the end of the period covered by this report, and that our disclosure controls and procedures are also effective to ensure that information required to be disclosed in the reports we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the third quarter of fiscal year 2005 ended September 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On August 10, 2005, we sold to one accredited investor a 10% convertible promissory note in the principal amount of $100,000 due November 8, 2005, and warrants to purchase 333,333 shares of common stock. Interest on the note is due at maturity. Interest is to accrue on the principal amount at a fixed simple rate of ten percent per year, calculated on the actual number of days elapsed on the basis of a 360 day year. The principal amount and accrued interest on the note may be converted into shares of common stock at the conversion price of $0.30 per share. The warrants are exercisable at a price of $0.30 per share until August 10, 2008. Our obligations under the note are protected by a subordinated lien on our intellectual property, that is subordinate to the liens of prior lenders. We granted the investor certain piggyback registration rights with respect to the shares of common stock underlying the securities purchased, agreeing to seek registration of the eligible shares in a registration statement that we file at a future date. If we do not file a registration statement within a six month period, the holder is entitled to demand the filing of a registration statement covering the resale of the underlying shares of common stock. We used the proceeds for general corporate purposes. We relied on an exemption from registration for a private transaction not involving a public distribution provided by Section 4(2) under the Securities Act.

On August 22, 2005, we sold to one accredited investor a 10% convertible promissory note in the principal amount of $100,000 due November 21, 2005, and warrants to purchase 333,333 shares of common stock. Interest on the note is due at maturity. Interest is to accrue on the principal amount at a fixed simple rate of ten percent per year, calculated on the actual number of days elapsed on the basis of a 360 day year. The principal amount and accrued interest on the note may be converted into shares of common stock at the conversion price of $0.30 per share. The warrants are exercisable at a price of $0.30 per share until August 22, 2008. Our obligations under the note are protected by a subordinated lien on our intellectual property, that is subordinate to the liens of prior lenders. We granted the investor certain piggyback registration rights with respect to the shares of common stock underlying the securities purchased, agreeing to seek registration of the eligible shares in a registration statement that we file at a future date. If we do not file a registration statement within a six month period, the holder is entitled to demand the filing of a registration statement covering the resale of the underlying shares of common stock. We used the proceeds for general corporate purposes. We relied on an exemption from registration for a private transaction not involving a public distribution provided by Section 4(2) under the Securities Act.

On October 1, 2005, in a transaction deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering, we entered into a consulting agreement with CEOcast, Inc., pursuant to which we agreed to issue 200,000 shares of our common stock in connection with the agreement, and 182,000 shares of common stock in connection with balance due under a prior agreement with CEOcast dated September 1, 2004. The agreement is for a term of six months.

In October 2005, we sold to three accredited investors 30,000 units of our securities for $300,000. Each unit, at a price of $10,000, consists of: (i) a 12% $10,000 convertible debenture, convertible into shares of common stock at $0.30 per share, and (ii) warrants to purchase 25,000 shares of the Company's common stock. Interest on the principal amount of the debenture will accrue at the simple interest rate of 12% per year computed on the basis of a 360 day year. Interest is payable at maturity in cash. The debenture will mature in 18 months from issue, unless earlier due. The debentures are secured by assets of our company, to the extent not already encumbered. We agreed not to grant any other person, after the closing upon the private placement pursuant to which the units were offered, a priority security interest in its assets for so long as the debentures remain outstanding, except with the consent of 2/3 of the outstanding face amount of holders of the debentures. Consent of a two-thirds majority of the holders of our debentures will be required for (i) any sale by the company of substantially all of our assets unless the proceeds of such sale are used to repay the debentures, (ii) any merger of the company with another entity, where we are not the surviving corporation, unless as part of such transaction the debentures will be repaid, or (iii) certain other actions materially affecting the debentures that require approval of the debenture holders under the corporations laws of the State of Nevada. The warrants will be exercisable for a period of five years into shares of common stock at $0.30 per share. We granted the investor certain piggyback registration rights with respect to the shares of common stock underlying the warrants purchased, agreeing to seek registration of the eligible shares in a registration statement that we file at a future date. We used the proceeds for general corporate purposes. We relied on an exemption from registration for a private transaction not involving a public distribution provided by Section 4(2) under the Securities Act.

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ITEM 5. OTHER INFORMATION

We entered into a license agreement dated February 1, 2005 with Color Media International. Under the agreement, we licensed the right to intellectual property called Pretty Pony Club in connection with the sale of comic books. The license territory is Serbia and Montenegro. We are to receive royalties of 5% of the net sales price. The minimum guaranteed royalty is UK (pounds) 10,000 plus VAT, payable quarterly over the term of the license. The license expires on January 31, 2007.

We entered into a license agreement dated April 20, 2005 with Character Options Ltd. Under the agreement, we licensed the right to Muffin The Mule intellectual property for use in connection with the sale of toy products, not yet specified. The license territory is the United Kingdom, Channel Islands, and Ireland. We are to receive royalties of 10% of the sales price. The minimum guaranteed royalty is UK (pounds) 100,000. The license period is for three years.

We entered into a license agreement dated July 2005 with Future Publishing Limited. Under the agreement, we licensed the right to Muffin The Mule intellectual property for use in connection with the sale of a magazine. The license territory is the United Kingdom, Ireland, Northern Ireland, Channel Islands, and the Isle of Man. We are to receive royalties of 6% of the cover price less VAT on sales of the magazine after the first six issues. The minimum guaranteed royalty is UK (pounds) 22,500 plus VAT payable in five installments, with the first installment payable at the time of the publication of the seventh issue and payable quarterly thereafter. The license period is for two years from the first publication date.

We entered into a Television License Agreement dated July 11, 2005with HOP! Channel Ltd. for the broadcast of 52 eleven minute episodes (9.5 hours) of The Wumblers on cable and satellite television. The territory is Israel. The license fee per hour is USD $400, or a total license fee of USD $3,800. The license period is for four years from January 1, 2006.

We entered into a license agreement dated August 16, 2005 with Martin Yaffe International Ltd. Under the agreement, we licensed the right to Muffin The Mule intellectual property for use in connection with the sale of rocking horse and stick horse toys. The license territory is the United Kingdom and Ireland. We are to receive royalties of 10% of the net sales price or 12% of F.O.B. price. The minimum guaranteed royalty is UK (pounds) 7,500 plus VAT payable quarterly over the term of the license. The license expires on December 31, 2007.

We entered into a license agreement dated September 1, 2005 with Toontastic Publishing Ltd. This is a renewal of an earlier license agreement dated December 5, 2002, and renewed in 2004. Under the agreement, we licensed the right to intellectual property called Pretty Pony Club in connection with the sale of comic books. The license territory is the United Kingdom and Ireland. We are to receive royalties of 4% of the net sales price and 5% of Toontastic purchase price on covermounts manufactured by a third party of Pretty Pony Club toys. There is no minimum guaranteed royalty under the renewed license. The license expires on August 31, 2006.

We entered into a license agreement, dated September 1, 2005, with Fun2Learn Ltd. Under the agreement, we licensed the right to Muffin The Mule intellectual property for use in connection with children's coin operated rides. The license territory is the United Kingdom. We are to receive royalties of UK (pounds) 100 per unit. The minimum guaranteed royalty is UK (pounds) 2,000 plus VAT payable quarterly over the term of the license. The license expires on December 31, 2007.

The staff of the Division of Corporation Finance of the Securities and Exchange Commission issued comments on June 9, 2005 to the Company in connection with its review of the Company's Annual Report on Form 10-KSB/A for the year ended December 31, 2004 filed on May 16, 2005. Based on these comments and discussions with the Commission, and after consultation with the Company's independent registered public accounting firm, the Company's management recommended, and its Board of Directors determined on June 24, 2005, that it will restate its financial statements for the year ended December 31, 2004. As a result, the financial statements issued by the Company for the year ended December 31, 2004 should no longer be relied upon. The Company's determination to restate these previously issued financial statements stems from comments from the Commission requesting information related to (i) the accounting of pre-production labor costs, and (ii) the nature, source, and basis for measurement of foreign exchange gain (loss). The Company is working with its independent auditors to complete the review of the accounting matters and quantify the impact on the financial statements that were previously filed. The Company does not believe that the changes will materially adversely affect the Company's results of operation for the year ended December 31, 2004. Once this review is complete, the Company will restate its 2004 year end financial statements. The Company expects to complete its review of this matter shortly.

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ITEM 6. EXHIBITS

The following exhibits are filed with this report:

Exhibit Number    Description of Exhibit
--------------    ----------------------

4.1               Form of Securities Purchase Agreement, May 2005 (Incorporated
                  by reference to Exhibit 4.1 of Form 8-K filed on July 15,
                  2005)
4.2               Securities Purchase Agreement, August 10, 2005 (Incorporated
                  by reference to Exhibit 4.2 of Form 10-QSB filed on August 17,
                  2005)
4.3*              Securities Purchase Agreement, August 22, 2005
4.4*              Form of Agreements related to sale of Units of Securities,
                  October 2005
10.1*             License Agreement with Color Media International, dated
                  February 1, 2005
10.2*             License Agreement with Character Options Ltd., dated April 20,
                  2005
10.3*             License Agreement with Future Publishing Limited, July 2005
10.4*             Television License Agreement with HOP! Channel Ltd., dated
                  July 11, 2005
10.5*             License Agreement with Martin Yaffe International Ltd, dated
                  August 16, 2005
10.6*             License Agreement with Toontastic Publishing Ltd., Renewal,
                  dated September 1, 2005
10.7*             License Agreement with Fun2Learn Ltd., dated September 1, 2005
10.8*             Consultant Agreement with CEOcast, October 1, 2005
11                Statement re: computation of per share earnings is hereby
                  incorporated by reference to "Financial Statements" of Part I
                  - Financial Information, Item 1 - Financial Statements,
                  contained in this Form 10-QSB.
31.1*             Certification of Chief Executive Officer Pursuant to
                  Securities Exchange Act Rule 13a-14(a)/15d-14(a)
31.2*             Certification of Principal Financial Officer Pursuant to
                  Securities Exchange Act Rule 13a-14(a)/15d-14(a)
32.1*             Certification of Chief Executive Officer Pursuant to 18 U.S.C.
                  Section 1350
32.2*             Certification of Principal Financial Officer Pursuant to 18
                  U.S.C. Section 1350
---

* Filed herewith.

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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.

PEAK ENTERTAINMENT HOLDINGS, INC.

Dated:  November 21, 2005                By:  /s/ WILFRED SHORROCKS
                                              ---------------------
                                         Wilfred Shorrocks,
                                         Chairman and Chief Executive Officer



Dated:  November 21, 2005                By:  /s/ NICOLA YEOMANS
                                              ------------------
                                         Nicola Yeomans
                                         Principal Financial Officer

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EXHIBIT 4.3

SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated August 22, 2005, by and among Peak Entertainment Holdings, Inc., a Nevada corporation (the "Company"), and the purchaser set forth on the signature page hereto ("Buyer").

WHEREAS:

A. The Company and Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 Act");

B. This Agreement is for a private placement offering by the Company pursuant to which the Buyer is purchasing a $100,000 ninety day convertible promissory note yielding 10% simple annual interest (the "Private Placement");

C. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement: (i) 10% convertible promissory note of the Company, in the form attached hereto as Exhibit A (the "Promissory Note"), convertible into shares of common stock of the Company (the "Common Stock"), at a valuation of $0.30 per share ("Bridge Valuation"), upon the terms and subject to the limitations and conditions set forth in such Promissory Note; and (ii) such number of warrants as providing a 35% warrant coverage ("Warrant Coverage"), in the form attached hereto as Exhibit B, to purchase shares of the Company's Common Stock (the "Warrants"), exercisable for three years at $0.30 per share; (the Common Stock and Warrants are sometimes referred to herein as the "Securities")

D. Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, the amount of Securities issuable in the Private Placement for that "Amount Invested" that Buyer indicates on the signature page hereto;

NOW THEREFORE, the Company and Buyer hereby agrees as follows:

1. PURCHASE AND SALE OF SECURITIES.

a. Purchase of Securities. On the Closing Date (as defined below), the Company shall issue and sell to Buyer and Buyer agrees to purchase from the Company such principal amount of Promissory Note as equals the Amount Invested and such number of Warrants as providing a 100% Warrant Coverage. "Warrant Coverage" is defined and calculated as the principal amount of the Promissory Note ($100,000) divided by the warrant exercise price, with that number then multiplied by 1.00. For example, an Amount Invested of $100,000 would entitle the Buyer to: (i) $100,000 in principal amount of Promissory Note; and (ii) warrants to purchase 333,333 shares of common stock.

b. Form of Payment. Upon execution of this Agreement, (i) Buyer shall pay the purchase price for the Promissory Note and the Warrants to be issued and sold to them at the Closing (as defined below) (the "Purchase Price") by wire transfer of immediately available funds shall be paid to the Company by wire transfer to:

Law Offices of Dan Brecher Escrow Account Account No. 95050499 Citibank, N.A.

90 Park Avenue
New York, NY 10016
ABA: 021000089

c. Closing Date. The date and time of the issuance and sale of the Securities pursuant to this Agreement (the "Closing Date") shall be on or before August 22, 2005.

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2. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants to the Company solely as to it that:

a. Investment Purpose. As of the date hereof, Buyer is purchasing the Promissory Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Promissory Note pursuant to this Agreement (such shares of Common Stock being collectively referred to herein as the "Conversion Shares") and the Warrants and the shares of Common Stock issuable upon exercise thereof (the "Warrant Shares" and, collectively with the Promissory Note, Warrants and Conversion Shares, the "Securities") for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

b. Accredited Investor Status. Buyer is a sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as defined in Rule 501 of Regulation D), and Buyer has such experience in business and financial matters that it has the capacity to protect its own interests in connection with this transaction and is capable of evaluating the merits and risks of an investment in the Securities pursuant to this Agreement. Buyer has been represented by counsel and advisors of its choice. Buyer acknowledges that an investment in the Securities pursuant to this Agreement is speculative and involves a high degree of risk.

c. Reliance on Exemptions. Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer to acquire the Securities.

d. Information. Buyer has conducted its own independent investigation of the Company, has access to the Company's filings on Edgar available at http://www.sec.gov/, and has, so far as the Buyer is aware, received all documents, records, books and other information pertaining to Buyer's investment in the Company that have been requested by Buyer.

e. Governmental Review. Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.

f. Transfer or Resale. Buyer understands that: (i) except as provided for herein, the sale or re-sale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) Buyer shall have delivered to the Company an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration to the reasonable satisfaction of the Company, (c) the Securities are sold or transferred to an "affiliate" (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) ("Rule 144")) of Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an accredited investor, or (d) the Securities are sold pursuant to Rule 144, and Buyer shall have delivered to the Company an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions to the reasonable satisfaction of the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to file to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case, other than pursuant to the provisions herein). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

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g. Legends. Buyer understands that until such time as the Securities have been registered under the 1933 Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Securities may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

h. Authorization; Enforcement. This Agreement has been duly authorized and validly executed and delivered by Buyer and is a valid and binding agreement of Buyer enforceable against it in accordance with its terms
(i) subject to applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application, (ii) subject to a court's discretionary authority with respect to the granting of specific performance, injunctive relief or other equitable remedies and (iii) except to the extent the indemnification and contribution provisions, if any, contained in any this Agreement may be limited by applicable federal or state securities laws or unenforceable as against public policy..

i. Residency. Buyer is a resident of the jurisdiction set forth immediately below Buyer's name on the signature page hereto.

                  j. Not an Affiliate. Buyer is not an officer, director or
"affiliate" (as that term is defined in Rule 405 under the 1933 Act) of the
Company.

                  k. Manner of Sale. At no time was Buyer presented with or

solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general solicitation or advertising.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to Buyer that:

a. Organization and Qualification. The Company and each of its subsidiaries, if any, is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, organized or formed, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. The Company and each of its subsidiaries is duly qualified or intends to apply for qualification as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. "Material Adverse Effect" means a material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. "Subsidiaries" means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.

b. Authorization; Enforcement. The Company has all requisite corporate power and authority to enter into and perform this Agreement and the agreements annexed hereto as exhibits (collectively the "Transaction Agreements") and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Agreements by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Securities), have been duly authorized by the Company's Board of Directors. This Agreement has been duly executed and delivered by the Company by its authorized representative,

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and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly. This Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

c. Capitalization. As of August 5, 2005, the authorized capital stock of the Company consists of 900,000,000 shares of Common Stock, of which approximately 31,470,108 shares are issued and outstanding. As of August 5, 2005, the Company has a principal amount of $958,500 in 8% convertible debentures issued in January 2004 outstanding (principal, as well as accrued interest, are convertible at $.30 per share), a principal amount of $360,000 in 12% convertible debentures issued in May 2005 outstanding (convertible at $.30 per share), and warrants to purchase 9,282,000 shares of common stock (such warrants or options are exerciseable at prices of $0.35 to $1.20 per share, with most of those warrants exercisable at either $0.50 or $0.75). On August 10, 2005, another investor paid $100,000 in exchange for a similar promissory note and warrants as are being purchased hereunder. The Company has a consulting agreement pursuant to which 106,380 shares remain to be issued in 2005. The Company also has or is negotiating commitments or plans for adoption that call for it to issue 5,000,000 shares and/or options or warrants to employees, consultants, and agents pursuant to negotiations or stock incentive plans yet to be formally adopted and approved or concluded. The Company also entered into a letter of intent with Maverick Entertainment Plc, pursuant to which it may be required to issue securities. All of such outstanding reserved shares of capital stock are, or upon issuance will be duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as set forth in this paragraph and in the SEC Documents, there are no outstanding options, warrants, rights (including, without limitation, rights of first refusal, anti-dilution, conversion, preemptive or similar rights) or agreements for the purchase or acquisition from the Company of any shares of its capital stock or any securities convertible into or ultimately exchangeable or exercisable for any shares of its capital stockother than the Securities.

d. Issuance of Shares. The Conversion Shares and Warrant Shares are duly authorized and reserved for issuance and, upon conversion of the Promissory Note and exercise of the Warrants in accordance with their respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company.

e. Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance of the Conversion Shares and Warrant Shares upon conversion of the Debenture or exercise of the Warrants. The Company further acknowledges that its obligation to issue Conversion Shares and Warrant Shares upon conversion of the Promissory Note or exercise of the Warrants in accordance with this Agreement, the Promissory Note and the Warrants is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

f. No Conflicts. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares and Warrant Shares), will not (i) conflict with or result in a violation of any provision of the Company's Articles of Incorporation or By-laws, (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its Articles of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse

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of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as a Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market in order for it to execute, deliver or perform any of its obligations under this Agreement, the Promissory Note or the Warrants in accordance with the terms hereof or thereof or to issue and sell the Promissory Note and Warrants in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Promissory Note and the Warrant Shares upon exercise of the Warrants.

g. Reports and Financial Statements; Absence of Certain Changes. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company with the SEC as of the date of this Agreement (collectively, the "SEC Documents") pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and has previously furnished or made available to Buyer true and complete copies of such SEC Documents and shall promptly deliver to Buyer any SEC Documents filed between the date hereof and the Closing Date. Such SEC Documents complied with the reporting requirements with respect thereto, and none of such SEC Documents, as of their respective dates (and as amended through the date hereof), contained or, with respect to SEC Documents filed after the date hereof, will contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. All reports, schedules, forms, statements and other documents required to be filed by any person or entity with respect to the Company pursuant to Section 16 of the 1934 Act as of the date hereof have been filed, and do not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Since December 31, 2004, other than in the ordinary course of business, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations or prospects of the Company or any of its Subsidiaries, except as disclosed herein or in the SEC Documents.

i. Intellectual Property. The Company has the rights stated herein and in the SEC Documents (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) and other similar rights and proprietary knowledge (collectively, "Intangibles") necessary for the conduct of its business as now being conducted. To the Company's knowledge, except as disclosed herein and/or in the SEC Documents, neither the Company nor any of its subsidiaries is infringing upon or in conflict with any right of any other person with respect to any Intangibles. Except as disclosed herein and/or in the SEC Documents, no adverse claims have been asserted by any person to the ownership or use of any Intangibles and the Company has no knowledge of any basis for such claim.

The obligations of the Company under the Promissory Note shall be secured by intellectual property owned by the Company; the security interest rights granted to the Buyer are behind those previously granted to existing debenture holders. The Company shall be entitled to grant security interest rights senior to the rights of the Buyer to a financial institution, subject to the approval of the Buyer, which shall not be unreasonably withheld. The Company shall be entitled to grant security interest rights similar to the rights granted to the Buyer to debenture purchasers in an offering planned to raise a total of $1 - $4 million dollars.

j. Trading in Securities. The Company specifically acknowledges that, except to the extent specifically provided herein or in any of the other Transaction Agreements (but limited in each instance to the extent so specified), Buyer retain the right (but are not otherwise obligated) to buy, sell, engage in hedging transactions or otherwise trade in the securities of the Company, including, but not necessarily limited to, the Securities, at any time before, contemporaneous with or after the execution of this Agreement or from time to time, but only, in each case, in any manner whatsoever permitted by applicable federal and state securities laws.

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4. COVENANTS.

a. SEC Reporting. So long as Buyer beneficially owns any of the Securities, the Company shall use best efforts to timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall use best efforts to maintain its status as an issuer filing reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination.

b. Use of Proceeds. The Company shall use the proceeds from the sale of the Securities for its working capital.

c. Listing. The Company will use best efforts, so long as Buyer owns at least one-third of the Securities, to maintain the quoting/listing and trading of its Common Stock on the OTCBB or any equivalent or replacement quotation service or exchange, including, but not limited to, the Nasdaq National Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the New York Stock Exchange ("NYSE"), or the American Stock Exchange ("AMEX") and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers ("NASD") and such exchanges, as applicable. The Company will promptly notify Buyer regarding the continued eligibility of the Common Stock for listing or quotation should there be a material change.

e. Corporate Existence. So long as Buyer beneficially owns any Promissory Note or Warrants, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company's assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company's assets, where the surviving or successor entity in such transaction (i) assumes the Company's obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX, or any other equivalent or replacement quotation service or exchange.

f. Registration Rights. If the Company proposes to register any of its securities under the Securities Act for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Forms S-4, S-8 and any successor forms thereto), each such time it will give written notice to such effect to each holder of the Securities from time to time (a "Holder") at least ten days prior to such filing. Upon the written request of any Holder, received by the Company within ten days after the giving of any such notice by the Company, to register any of its shares of common stock eligible to be registered, the Company will cause such shares as Buyer has a right to own pursuant to ownership of the Securities to be covered by the registration statement proposed to be filed by the Company. Notwithstanding the foregoing, in the event that any registration pursuant to this provision shall be, in whole or in part, an underwritten public offering of common stock, the number of shares to be included in such an underwriting may be reduced (pro rata among the requesting holders and the Company's placement agent and its assigns (based upon the number of Shares requested to be registered by them)) if and to the extent that the managing underwriter shall be of the good faith opinion that such inclusion would reduce the number of shares to be offered by the Company, its other securities owners, the placement agent and its assigns or requesting holders of Shares. Notwithstanding the foregoing provisions, the Company may withdraw any registration statement referred to in this provision without thereby incurring any liability to any Holder. In the event that the SEC restricts or prohibits the inclusion of any part of the common stock included in the registration statement on the basis of integration or that such securities are not deemed owned or paid for or any other reason, the Company shall not register such shares. Holder shall cooperate with the Company in furnishing such information regarding itself as reasonably needed to prepare, file and effect the registration statement, and the failure to cooperate shall suspend the Company's obligations discussed in this paragraph.

Notwithstanding anything to the contrary, if the Company has not filed a registration statement within six months hereof, Buyer shall be entitled to demand the filing of a registration statement covering the resale of the shares of common stock underlying the Securities purchased pursuant to this Agreement. Such demand shall be consistent with the Company's year-end federal securities reporting obligations.

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All expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to this paragraph, including, without limitation, all registration, filing and qualification fees (including "blue sky" fees), printers' and accounting fees, fees and disbursements of counsel for the Company (including fees and disbursements of counsel for the Company) shall be borne by the Company.

Whenever required under this paragraph to effect the registration of any shares of Common Stock underlying Securities of a Holder, the Company shall, as expeditiously as is feasible:

(i) prepare and file with the SEC a registration statement with respect to such shares of Common Stock underlying Securities and use commercially reasonable efforts to cause such registration statement to become effective, and keep such registration statement effective for a period of up to 120 days or, if earlier, until the distribution contemplated in such registration statement has been completed; provided, however, that such 120 day period shall be extended for a period of time equal to the period a Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company;

(ii) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement;

(iii) furnish to each Holder (A) a draft copy of the registration statement and (B) a prospectus, including a preliminary prospectus, in conformity with the requirements of the 1933 Act, and such other documents as it may reasonably request in order to facilitate the disposition of Securities owned by it;

(iv) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting, if any, shall also enter into and perform its obligations under such an agreement. In connection with any offering involving an underwriting of shares of the Company's capital stock, the Company shall not be required to include any of the Holders' securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company and enter into an underwriting agreement in customary form with an underwriter or underwriters selected by the Company. If the total amount of securities, including shares of Common Stock underlying Securities of a Holder, to be included in such offering exceeds the amount of securities that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of securities that the underwriters determine in their sole discretion will not jeopardize the success of the offering;

(v) notify each Holder of Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the 1933 Act, of (i) the issuance of any stop order by the SEC in respect of such registration statement, or (ii) the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; and.

(vi) use commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or "blue sky" laws of such jurisdictions as shall be reasonably requested by a Holder, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, where not otherwise required, or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the 1933 Act.

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5. CONDITIONS TO THE COMPANY'S OBLIGATION. The obligation of the Company hereunder to issue and sell the Securities to Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion:

a. Buyer shall have executed this Agreement, and delivered the same to the Company.

b. Buyer shall have delivered and the Company shall have received the Purchase Price in accordance with Section 1.

c. The representations and warranties of Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Buyer at or prior to the Closing Date.

d. No undisclosed litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

6. CONDITIONS TO BUYER'S OBLIGATION. The obligation of Buyer to purchase the Securities at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for Buyer's sole benefit and may be waived by Buyer at any time in its sole discretion:

a. The Company shall have executed this Agreement and the Warrant Agreement. The Company shall have submitted irrevocable instructions to its transfer agent for the issuance of the Common Stock.

b. The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

c. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

7. GOVERNING LAW; MISCELLANEOUS.

a. Governing Law. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS AND THE NEW YORK STATE COURTS LOCATED IN NEW YORK COUNTY IN THE STATE OF NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING.

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NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. The Company and Buyer hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the Parties hereto against the other in respect of any matter arising out or in connection with the Transaction Agreements.

b. Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

c. Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

d. Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

e. Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. Except as provided herein, no provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

f. Notices. Any notices required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier (including a recognized overnight delivery service) or by facsimile and shall be effective five days after being placed in the mail, if mailed by regular United States mail, or upon receipt, if delivered personally or by courier (including a recognized overnight delivery service) or by facsimile, in each case addressed to a party. The addresses for such communications shall be:

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If to the Company:


Attn.: Wilfred Shorrocks, President
Peak Entertainment Holdings, Inc.
Bagshaw Hall, Bagshaw Hill
Bakewell, Derbyshire, UK DE45 1DL
Tel: +44(0)1629 814555
Fax: +44(0)1629 813539

With a copy (which shall not constitute notice) to:

Attn.: Dan Brecher, Esq.
Law Offices of Dan Brecher
99 Park Avenue, 16th Floor
New York, NY 10016
Tel: 212-286-0747
Fax: 212-808-4155

If to Buyer:
At the address and facsimile number listed on the
signature page hereof.

Each party shall provide notice to the other party of any change in address.

g. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor any Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from Buyer or to any of its affiliates.

h. Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

i. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

j. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

k. Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that Buyer shall be entitled, in addition to all other available remedies at law or in equity.

l. Survival. The representations, warranties and covenants made by each of the Company and Buyer in this Agreement, the annexes, schedules and exhibits hereto and in each instrument, agreement and certificate entered into and delivered by them pursuant to this Agreement, shall survive the Closing and the consummation of the transactions contemplated hereby. In the event of a breach or violation of any of such representations, warranties or covenants, the party to whom such representations, warranties or covenants have been made shall have all rights and remedies for such breach or violation available to it under the provisions of this Agreement, irrespective of any investigation made by or on behalf of such party on or prior to the Closing Date.

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m. Indemnification.

(a) The Company hereby agrees to indemnify and hold harmless Buyer and its officers, directors, partners and members (collectively, the "Buyer Indemnitees"), from and against any and all damages, and agrees to reimburse Buyer Indemnitees for all reasonable out-of-pocket expenses (including the reasonable fees and expenses of legal counsel), in each case promptly as incurred by Buyer Indemnitees and to the extent arising out of or in connection with:

(i) any material misrepresentation, omission of fact or breach of any of the Company's representations or warranties contained in this Agreement, the annexes, schedules or exhibits hereto or any instrument, agreement or certificate entered into or delivered by the Company pursuant to this Agreement; or

(ii) any material failure by the Company to perform in any material respect any of its covenants, agreements, undertakings or obligations set forth in this Agreement, the annexes, schedules or exhibits hereto or any instrument, agreement or certificate entered into or delivered by the Company pursuant to this Agreement; or

(iii) any action instituted against any Buyer, or any of its affiliates, by any stockholder of the Company who is not an affiliate of Buyer, with respect to any of the transactions contemplated by this Agreement.

(b) Buyer hereby agrees to indemnify and hold harmless the Company, its affiliates and its respective officers, directors, partners and members (collectively, the "Company Indemnitees"), from and against any and all damages, and agrees to reimburse the Company Indemnitees for reasonable all out-of-pocket expenses (including the reasonable fees and expenses of legal counsel), in each case promptly as incurred by the Company Indemnitees and to the extent arising out of or in connection with:

(i) any material misrepresentation, omission of fact, or breach of any of any Buyer's representations or warranties contained in this Agreement, the annexes, schedules or exhibits hereto or any instrument, agreement or certificate entered into or delivered by Buyer pursuant to this Agreement; or

(ii) any material failure by Buyer to perform in any material respect any of its covenants, agreements, undertakings or obligations set forth in this Agreement or any instrument, certificate or agreement entered into or delivered by Buyer pursuant to this Agreement.

(c) Promptly after receipt by either party hereto seeking indemnification pursuant to this Section 7(m) (an "Indemnified Party") of written notice of any investigation, claim, proceeding or other action in respect of which indemnification is being sought (each, a "Claim"), the Indemnified Party promptly shall notify the party from whom indemnification pursuant to this Section 7(m) is being sought (the "Indemnifying Party") of the commencement thereof; but the omission to so notify the Indemnifying Party shall not relieve it from any liability that it otherwise may have to the Indemnified Party, except to the extent that the Indemnifying Party is actually prejudiced by such omission or delay. In connection with any Claim as to which both the Indemnifying Party and the Indemnified Party are parties, the Indemnifying Party shall be entitled to assume the defense thereof. Notwithstanding the assumption of the defense of any Claim by the Indemnifying Party, the Indemnified Party shall have the right to employ separate legal counsel and to participate in the defense of such Claim, and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs and expenses of such separate legal counsel to the Indemnified Party if (and only if): (x) the Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and expenses, (y) the Indemnified Party reasonably shall have concluded that representation of the Indemnified Party and the Indemnifying Party by the same legal counsel would not be appropriate due to actual or, as reasonably determined by legal counsel to the Indemnified Party, potentially differing interests between such parties in the conduct of the defense of such Claim, or if there may be legal defenses available to the Indemnified Party that are in addition to or disparate from those available to the Indemnifying Party, or (z) the Indemnifying Party shall have failed to employ legal counsel reasonably satisfactory to the Indemnified Party within a reasonable period of time after notice of the commencement of such Claim. If the Indemnified Party employs separate legal counsel in

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circumstances other than as described in clauses (x), (y) or (z) above, the fees, costs and expenses of such legal counsel shall be borne exclusively by the Indemnified Party. Except as provided above, the Indemnifying Party shall not, in connection with any Claim in the same jurisdiction, be liable for the fees and expenses of more than one firm of legal counsel for the Indemnified Party (together with appropriate local counsel). The Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which consent shall not unreasonably be withheld), settle or compromise any Claim or consent to the entry of any judgment that does not include an unconditional release of the Indemnified Party from all liabilities with respect to such Claim or judgment.

n. Certain Fees. Each party will bear its own expenses and fees in connection with this Agreement.

[signature page follows]

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IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.

THE COMPANY: PEAK ENTERTAINMENT HOLDINGS, INC.

By:      /s/ Wilf Shorrocks
   -----------------------------------------
         Wilf Shorrocks
         President and Chief Executive Officer

BUYER: HARRY EDELSON

By:      /s/ Harry Edelson
   --------------------------------------------------
         Name:    Harry Edelson
                ----------------------------
         Title:
                ----------------------------

STATE OF INCORPORATION/
FORMATION/RESIDENCE: New Jersey

ADDRESS: c/o Edelson Technology Partners 300 Tice Boulevard Woodcliff Lake, NJ 07677 Bus. Tel: (201) 930-8900 Bus Fax: (201) 930-8899 E-mail: harry@edelsontech.com

AMOUNT INVESTED: $100,000

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EXHIBIT A

THIS PROMISSORY NOTE AND THE SECURITIES PURCHASABLE UPON EXERCISE OF THE RIGHTS CONTAINED IN THIS PROMISSORY NOTE (COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AN EXEMPTION FROM SUCH REGISTRATION UNDER THE SECURITIES ACT IS APPLICABLE TO SUCH PROPOSED EXERCISE OR SALE, ASSIGNMENT, PLEDGE, TRANSFER OR OTHER DISPOSITION.

CONVERTIBLE PROMISSORY NOTE

$100,000 August 22, 2005 New York, New York

FOR VALUE RECEIVED, Peak Entertainment Holdings, Inc., a Nevada corporation (the "Borrower"), hereby promises to pay to Harry Edelson (the "Holder"), the sum of $100,000 on November 21, 2005 (the "Maturity Date"), together with accrued interest. Borrower shall repay the principal and any accrued but unpaid interest due upon this Note on the Maturity Date, by check or wire transfer to the person who is the registered holder of this Note. Whenever any payment to be made hereunder falls due on a Saturday, Sunday or business holiday in New York, New York, such payment may be made on the next succeeding business day and such extension of time will, in such case, be included in computing interest, if any, in connection with such payment.

Interest shall accrue on the principal amount of the Note at a fixed simple rate of ten percent (10%) per year, calculated on the actual number of days elapsed on the basis of a 360 day year.

Until and including on the Maturity Date, the Holder shall have the right to convert the full unpaid principal and interest of this Promissory Note into fully paid and nonassessable shares of Borrower's common stock. The conversion price shall be $0.30 per share (the "Conversion Price"). Any fractional shares issuable upon conversion of this Note shall be rounded down to the nearest whole share.

The Conversion Price and the number of shares issuable upon conversion shall be proportionally adjusted for an Adjustment Event, as defined herein. The term "Adjustment Event" shall mean any stock split, reverse stock split, stock dividend, reclassification of the common stock, recapitalization, merger or consolidation, or like capital adjustment affecting the number of common stock of the Borrower outstanding. The good faith determination by the Board of Directors as to what adjustments, amendments or arrangements shall be made to the Conversion Price, and the extent thereof, shall be final and conclusive, provided that the Conversion Price is adjusted in a manner that is no less favorable than the manner of adjustment used as to any other person with similar adjustment rights.

Conversion of all or a part of this Note shall be effectuated by submitting a written notice, in the name of the Holder stated in Schedule 1 hereto (the "Notice of Conversion"), executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof. No fraction of a share or scrip representing a fraction of a share will be issued on conversion, but the number of shares issuable shall be rounded down to the nearest whole share. The date on which Notice of Conversion is given (the "Conversion Date") shall be deemed to be the date on which the Borrower first receives the Notice of Conversion. Certificates representing Common Stock upon conversion will be delivered to the Holder within three (3) trading days, subject to reasonable delay for processing by the Borrower's transfer agent if any, from the date the Notice of Conversion is delivered to the Borrower ("Delivery Date"). Delivery of shares upon conversion shall be made to the address specified by the Holder in the Notice of Conversion.

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The obligations of Borrower for repayment of principal and payment of interest on maturity are secured by a subordinated lien on intellectual property of the Company, that is subordinate to the liens of prior lenders as described in the Borrower's public filings.

Any notice herein required or permitted to be given shall be in writing and sent by means of certified or registered mail, express mail, or other overnight delivery service, hand delivery confirmed by signed receipt or facsimile transmission (followed by prompt transmission of the original of such notice by any of the foregoing means) in each case proper postage or other charges pre-paid and addressed or directed to the Holder or to the Borrower as the address set forth in the Securities Purchase Agreement. Such notice shall be deemed given when actually received. Both the Holder and Borrower may change the address and fax number for notices by service of notice to the other as herein provided.

The following shall constitute an "Event of Default":

(a) The Borrower fails to issue shares of Common Stock to the Holder or to cause its Transfer Agent to issue shares of Common Stock upon proper exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note; or
(b) The Borrower shall, without cause, fail to perform or observe, in any material respect, any other material covenant, term, provision, condition, agreement or obligation of the Borrower under the Securities Purchase Agreement and such failure shall continue uncured for a period of thirty days after written notice from the Holder of such failure; or

Borrower waives demand for payment, notice of nonpayment, presentment, notice of dishonor, protest, and notice of protest. If default is made in the payment of this Promissory Note, Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys' fees.

This Promissory Note shall be governed by the internal laws of the State of New York. Any proceedings related to this Promissory Note shall be brought in New York County in the State of New York.

This Promissory Note is the entire agreement between the parties and neither party is relying on any prior or contemporaneous representation or promise, or any omission of any information, in entering into this Promissory Note.

[signature page follows]

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IN WITNESS WHEREOF, Borrower has caused this Promissory Note to be signed in its name by its duly authorized representative on the date first written.

PEAK ENTERTAINMENT HOLDINGS, INC.

By:     /s/ Wilf Shorrcks
   -----------------------------------------
Name:   Wilf Shorrocks
Title:  Chief Executive Officer

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SCHEDULE 1

NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to Convert the Debentures)

The undersigned hereby irrevocably elects to convert $ ________________ of the principal amount of the above Note, dated August 22, 2005 into Shares of Common Stock of PEAK ENTERTAINMENT HOLDINGS, INC. (the "Company") according to the conditions hereof, as of the date written below.

Date of Conversion:

Conversion Price:

Accrued Interest:

Number of Shares of Common Stock to be Issued:

Name:

Signature:

Address:

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EXHIBIT B

THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE SET FORTH HEREIN, OR IN THE SECURITIES PURCHASE AGREEMENT, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

PEAK ENTERTAINMENT HOLDINGS, INC.

COMMON STOCK PURCHASE WARRANT
RIGHT TO PURCHASE 333,333 SHARES OF COMMON STOCK
EXERCISE PRICE: $0.30 PER SHARE

Warrant No. 081205.1

THIS CERTIFIES THAT, for value received, Harry Edelson (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the closing of the related Securities Purchase Agreement (the "Initial Exercise Date") entered into Peak Entertainment Holdings, Inc., a Nevada corporation (the "Company") and the Holder, as of even date, and on or prior to the close of business on the third year anniversary of this Warrant (the "Termination Date"), but not thereafter, to subscribe for and purchase from the Company, up to 333,333 fully paid and nonassessable shares of the Company's Common Stock (the "Common Stock"), at the exercise price of $0.30 per share (the "Exercise Price"). The Exercise Price and the number of shares for which this Warrant is exercisable shall be subject to adjustment as provided herein. In the event of any conflict between the terms of this Warrant and the Securities Purchase Agreement, the Securities Purchase Agreement shall control. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Securities Purchase Agreement.

1. Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto, properly endorsed.

2. Authorization of Shares. The Company covenants that all shares of Common Stock which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3. Exercise of Warrant. Except as provided in Sections 4 and 5 herein, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date, and before the close of business on the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto, duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company) and upon payment of the Exercise Price of the shares thereby purchased by wire transfer or cashier's check drawn on a United States bank, the holder of this Warrant shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. Certificates for shares purchased hereunder shall be delivered to the Holder hereof within three (3) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date this Warrant has been exercised by payment

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to, and receipt thereof by, the Company of the Exercise Price and all taxes required to be paid by Holder, if any, pursuant to Section 5 herein prior to the issuance of such shares. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which new warrant shall in all other respects be identical with this Warrant.

4. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the Exercise Price.

5. Limitation on Exercise of Warrant. In no event shall the Holder be permitted to exercise this Warrant for shares of Common Stock in excess of the amount of this Warrant upon the exercise of which, (x) the number of shares of Common Stock beneficially owned by such Holder (other than shares of Common Stock issuable upon exercise of this Warrant) plus (y) the number of shares of Common Stock issuable upon exercise of this Warrant, would be equal to or exceed 4.9% of the number of shares of Common Stock then issued and outstanding, including shares issuable upon exercise of this Warrant held by such Holder after application of this Section 5. As used herein, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. To the extent that the limitation contained in this Section 5 applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and which portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder's determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to exercise this Warrant into shares of Common Stock at such time as such exercise will not violate the provisions of this
Section 5. The provisions of this Section 5 may be waived by the Holder of this Warrant upon not less than 75 days' prior notice to the Company, and the provisions of this Section 5 shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No exercise of this Warrant in violation of this Section 5, but otherwise in accordance with this Warrant, shall affect the status of the Common Stock issued upon such exercise as validly issued, fully-paid and nonassessable.

6. Charges, Taxes and Expenses. Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder of this Warrant, or in such name or names as may be directed by the holder of this Warrant; provided, however, that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder of this Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto, duly executed by the Holder hereof; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

7. Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant.

8. Transfer, Division and Combination.

(a) Subject to compliance with any applicable securities laws, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new warrant or warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to

2

the assignor a new warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. This Warrant, if properly assigned, may be exercised by a new holder for the purchase of shares of Common Stock without having a new warrant issued.

(b) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by Holder or its agent or attorney. Subject to compliance with Section 8(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this
Section 8.

(d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

9. No Rights as Shareholder until Exercise. This Warrant does not entitle the Holder hereof to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

10. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant certificate or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

12. Adjustments of Exercise Price and Number of Warrant Shares.

(a) Stock Splits, etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In the event that the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, (iv) issue any shares of its capital stock in a reclassification of the Common Stock, or (v) otherwise transacts a similar adjustment to its class of Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant and the Exercise Price immediately prior thereto shall be adjusted so that the holder of this Warrant shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which the holder would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the holder of this Warrant shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

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(b) Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of shares of Common Stock for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are exercisable into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

(c) Adjustment for Spin Off. If, for any reason, prior to the exercise of this Warrant in full, the Company spins off or otherwise divests itself of a part of its business or operations or disposes all or a part of its assets in a transaction (the "Spin Off") in which the Company does not receive compensation for such business, operations or assets, but causes securities of another entity (the "Spin Off Securities") to be issued to security holders of the Company, then

(A) the Company shall cause (i) to be reserved Spin Off Securities equal to the number thereof which would have been issued to the Holder had all of the Holder's unexercised Warrants outstanding on the record date (the "Record Date") for determining the amount and number of Spin Off Securities to be issued to security holders of the Company (the "Outstanding Warrants") been exercised as of the close of business on the trading day immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the exercise of all or any of the Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction, of which (I) the numerator is the amount of the Outstanding Warrants then being exercised, and (II) the denominator is the amount of the Outstanding Warrants; and

(B) the Exercise Price on the Outstanding Warrants shall be adjusted immediately after consummation of the Spin Off by multiplying the Exercise Price by a fraction (if, but only if, such fraction is less than 1.0), the numerator of which is the average Closing Bid Price of the Common Stock for the five (5) trading days immediately following the fifth trading day after the Record Date, and the denominator of which is the average Closing Bid Price of the Common Stock on the five (5) trading days immediately preceding the Record Date; and such adjusted Exercise Price shall be deemed to be the Exercise Price with respect to the Outstanding Warrants after the Record Date.

13. Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

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14. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall promptly send notice to the holder of this Warrant notice of such adjustment or adjustments setting forth the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. Such notice, in the absence of manifest error, shall be conclusive evidence of the correctness of such adjustment.

15. Redemption. Prior to the Termination Date, the Warrant shall be redeemable, under the circumstances described in this Section, at the discretion of the Company, for $.10 per warrant (the "Redemption Fee"). The Company's right to redemption shall be exercisable commencing upon the day following the tenth consecutive business day during which the Company's common stock has traded at prices of, or in excess of, $1.00 per share, subject to adjustment for stock splits, dividends, subdivisions, reclassification and the like, with weekly volume of such trading being in excess of the total number of shares represented by this Warrant. In the event the Company exercises its right to redeem the Warrants, the Company shall give the Holder written notice of such decision. In the event that the Holder does not exercise all or any part of the Warrants or that the Company does not receive the Warrant from the Holder within 30 days from the date on the notice to the Holder of the Company's intention to redeem the Warrant, then the Warrant shall be deemed canceled, and the Holder shall not be entitled to further exercise thereof or to the Redemption Fee.

16. Notice of Corporate Action. If at any time:

(a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to the Holder (i) at least 30 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 30 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to the Holder at the last address of the Holder appearing on the books of the Company and delivered in accordance with Section 18(d).

17. Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the

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exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the OTCBB or other market upon which the Common Stock may be listed.

The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and
(b) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

18. Miscellaneous.

(a) Jurisdiction. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of New York without regard to its conflict of law, principles or rules, and be subject to governing law provisions set forth in the Securities Purchase Agreement.

(b) Restrictions. The holder hereof acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

(c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company fails to comply with any provision of this Warrant, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(d) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder hereof by the Company shall be delivered in accordance with the notice provisions of the Securities Purchase Agreement.

(e) Limitation of Liability. No provision hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.

(g) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h) Indemnification. The Company agrees to indemnify and hold harmless the Holder from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against the

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Holder in any manner relating to or arising out of any failure by the Company to perform or observe in any material respect any of its covenants, agreements, undertakings or obligations set forth in this Warrant; provided, however, that the Company will not be liable hereunder to the extent that any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are found in a final non-appealable judgment by a court to have resulted from the holder's negligence, bad faith or willful misconduct in its capacity as a stockholder or warrantholder of the Company.

(i) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(j) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(k) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

(l) Piggyback Registration Rights. The initial Holder of this Warrant is entitled to the benefit of certain registration rights with respect to the shares of Common Stock issuable upon the exercise of this Warrant. If the Company, at any time from the date of this Warrant through the date of expiration of this Warrant, proposes to register any of its securities under the Securities Act for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Forms S-4, S-8 and any successor forms thereto), each such time the Company will give written notice to such effect to the Holder at least 30 days prior to such filing. Upon the written request of Holder, received by the Company within 30 days after the giving of any such notice by the Company, to register any of the shares of Common Stock underlying this Warrant, the Company will cause, at Company's expenses, such underlying shares of Common Stock to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition by the holder of such shares so registered.

[signature page follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: August 22, 2005

Peak Entertainment Holdings, Inc.

By:      /s/ Wilf Shorrocks
   -----------------------------------------
         Wilf Shorrocks
         President and Chief Executive Officer

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NOTICE OF EXERCISE

To: Peak Entertainment Holdings, Inc.

The undersigned hereby elects to purchase ________ shares of Common Stock (the "Common Stock"), at an exercise price of $0.30 per share, of Peak Entertainment Holdings, Inc. pursuant to the terms of the attached Warrant, Warrant No. 081205.1, and tenders herewith payment of the exercise price in full, in the amount of $_____________, together with all applicable transfer taxes, if any.

Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:


(Name)


(Address)

Dated:


Signature

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

-------------------------------------------------------------------------------
whose address is                                                               .
                 --------------------------------------------------------------


Dated:
      ---------------------


                           Holder's Signature:       ___________________________

                           Holder's Address:         ___________________________

                                                     ___________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in an fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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EXHIBIT 4.4

[FORM OF DEBENTURE]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

PEAK ENTERTAINMENT HOLDINGS, INC.

12% CONVERTIBLE DEBENTURE

Debenture No. [____]

THIS DEBENTURE is issued by Peak Entertainment Holdings, Inc., a corporation organized and existing under the laws of the State of Nevada (the "Company") and is designated as its 12% Convertible Debenture (the "Debentures"). This Debenture is issued pursuant to a private placement for the sale of up to 400 Units of debentures and warrants (the "Private Placement").

FOR VALUE RECEIVED, the Company promises to pay to
[_________________________________] (the "Holder"), the principal sum of
[______________________ Dollars ($________] on the Maturity Date (as defined herein) and to pay interest on the principal amount outstanding at the simple rate of twelve percent (12%) per annum, accruing from the date of issue. The "Maturity Date" is the earlier of eighteen months from the date of issue, or any future funding of any dollar amount (excluding funds pursuant to the Private Placement) equaling 15% more than amounts closed pursuant to the Private Placement. The Company will pay the principal of, and any accrued but unpaid interest due upon this Debenture on the Maturity Date, by check or wire transfer to the person who is the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check or money order shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check or wire transfer plus any amounts so deducted. Notwithstanding anything to the contrary herein, the Company shall have the right to repay the Debenture at any time prior to the Maturity Date without penalty. The obligations of the Company under this Debenture shall be secured by that certain Security Agreement and Intellectual Property Security Agreement by and between the Company and the Holder entered into in connection with these Debentures.

This Debenture is subject to the following additional provisions:

1. The Company shall be entitled to withhold from all payments of interest on this Debenture any amounts required to be withheld under the applicable provisions of the United States income tax laws or other applicable laws at the time of such payments, and the Holder shall execute and deliver all required documentation in connection therewith.

2. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Act or any applicable state or foreign securities laws. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the Company's Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Subscription Agreement pursuant to the Private Placement between the Company and the Holder entered into as of even date (the "Subscription Agreement"), and is subject to the terms and conditions of the Private Placement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Private Placement documents.

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3. The Holder of this Debenture is entitled, at its option, to convert at any time commencing on the date of this Agreement, the principal amount of this Debenture or any portion thereof, into shares of Common Stock of the Company ("Conversion Shares") at the valuation of $0.30 per share ("Bridge Valuation" or "Conversion Price"), subject to adjustment for stock splits and the like. Any conversion at or prior to maturity of this Debenture shall constitute a waiver of all accrued interest on the Debenture. If, upon any conversion of this Debenture, the Company's issuance of Conversion Shares would cause it to violate any listing requirement of the OTCBB or other public market through which the Company's Common Stock is listed or quoted, then in lieu of such stock issuance, the Company shall pay the Holder cash in an amount equal to the closing price of the Common Stock on the Conversion Date multiplied by the number of shares which would otherwise have been issuable upon such conversion within five (5) calendar days.

In case of any stock split or reverse stock split, stock dividend, reclassification of the common stock, recapitalization, merger or consolidation, or like capital adjustment affecting the Common Stock of the Company, the provisions of this Section 3 shall be applied in a fair, equitable and reasonable manner so as to give effect, as nearly as may be, to the purposes hereof.

4. The rate of interest on this Debenture shall be twelve percent (12%), per annum, calculated on a 360 day year basis on the outstanding principal until paid or converted.

5. On the Maturity Date, the Company will pay the principal of, and any accrued but unpaid interest due upon, this Debenture, less any amounts required by law to be deducted, to the registered holder of this Debenture and addressed to such holder at the last address appearing on the Debenture Register. If any due date for payment is not a business day in the State of New York, then such payment shall be made on the next succeeding business day.

If the outstanding amount of this Debenture is not paid in full on maturity, and has not been converted, or tendered by the Holder as consideration for a private placement, there will be a cash penalty equal to 1.5% of the outstanding principal amount of the Debenture, compounded monthly for each month that payment in full is not effected, up to a maximum cash penalty equal to 9% of the outstanding principal amount of the Debenture, and, in addition, there will be monthly reduction in warrant exercise price of the warrants issued pursuant to the Private Placement at the rate of 2.5% and up to a maximum of 20% reduction in the exercise price.

6. Conversion of all or a part of this Debenture shall be effectuated by surrendering this Debenture to the Company (if such Conversion will convert all outstanding principal) together with the form of conversion notice attached hereto as Exhibit A (the "Notice of Conversion"), executed by the Holder of this Debenture evidencing such Holder's intention to convert this Debenture or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. No fraction of a share or scrip representing a fraction of a share will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The date on which Notice of Conversion is given (the "Conversion Date") shall be deemed to be the date on which the Holder faxes the Notice of Conversion duly executed to the Company. Facsimile delivery of the Notice of Conversion shall be accepted by the Company at facsimile number +44(0)1629 813539, Attn.: Wilfred Shorrocks, President, to the Company's attorneys, Law Offices of Dan Brecher at facsimile number 212-808-4155, Attn.: Kenneth Oh, or such other facsimile number provided, in writing, by the Company. Certificates representing Common Stock upon conversion will be delivered to the Holder within three (3) Trading Days from the date the Notice of Conversion is delivered to the Company ("Delivery Date"). Delivery of shares upon conversion shall be made to the address specified by the Holder in the Notice of Conversion.

7. No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency or shares of Common Stock herein prescribed. This Debenture is a direct obligation of the Company.

8. No recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

9. (a) In case of any (1) merger or consolidation of the Company with or into another third-party entity, excluding non-material transactions with parent, subsidiaries or affiliates, or (2) sale by the Company of more than one-half of the assets of the Company (on an as valued basis) in one or a series of related transactions, the Holder shall have the right to (A) deem such an occurrence an Event of Default and exercise its rights of prepayment pursuant to Paragraph 12 herein, (B) convert its aggregate principal amount of this Debenture then outstanding into

2

the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and the Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, (x) require the surviving entity to issue convertible debentures with such aggregate stated value or in such face amount, as the case may be, equal to the aggregate principal amount of this Debenture then held by the Holder, plus all accrued and unpaid interest and other amounts owing thereon, which newly issued debentures shall have terms identical (including with respect to conversion) to the terms of this Debenture and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debenture was issued (including, without limitation, as such rights relate to the acquisition, transferability, registration and listing of such shares of stock and other securities issuable upon conversion thereof), and (y) simultaneously with the issuance of such convertible debentures, shall have the right to convert such instrument only into shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger or consolidation. In the case of clause (C), the conversion price applicable for the newly convertible debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Paragraph upon any conversion or redemption following such event. This Paragraph shall similarly apply to successive such events.

(b) If, at any time while any portion of this Debenture remains outstanding, the Company spins off or otherwise divests itself of a part of its business or operations or disposes of all or of a part of its assets in a transaction (the "Spin Off") in which the Company, in addition to or in lieu of any other compensation received and retained by the Company for such business, operations or assets, causes securities of another entity (the "Spin Off Securities") to be issued to security holders of the Company, the Company shall cause (i) to be reserved Spin Off Securities equal to the number thereof which would have been issued to the Holder had all of the Holder's Debentures outstanding on the record date (the "Record Date") for determining the amount and number of Spin Off Securities to be issued to security holders of the Company (the "Outstanding Debentures") been converted as of the close of business on the trading day immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the conversion of all or any of the Outstanding Debentures, such amount of the Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction, of which (I) the numerator is the principal amount of the Outstanding Debentures then being converted, and (II) the denominator is the principal amount of the Outstanding Debentures.

10. The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the Conversion Shares except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities.

11. This Debenture shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties consents to the jurisdiction of the federal courts and the state courts located in New York County in the State of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions.

12. The following shall constitute an "Event of Default":

(a) The Company shall default in the payment of principal or interest on this Debenture at the Maturity Date and same shall continue for a period of twenty business days; or

(b) Any of the material representations or warranties made by the Company herein, in the Subscription Agreement, or in the Private Placement Memorandum (the "PPM") pursuant to the Private Placement furnished by the Company in connection with the execution and delivery of this Debenture shall be false or misleading in any material respect at the time made, it being specifically understood by the Holder that forward looking statements are not to be the subject of any claims hereunder; or

(c) The Company fails to issue shares of Common Stock to the Holder or to cause its Transfer Agent to issue shares of Common Stock upon proper exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Debenture, fails to transfer or to cause its Transfer Agent to transfer any certificate for shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture or the terms of the Private Placement, and such transfer is otherwise lawful, or fails to remove any

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restrictive legend or to cause its Transfer Agent to transfer any certificate or any shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture, the terms of the Private Placement and such legend removal is otherwise lawful, and any such failure shall continue uncured for twenty business days; or

(d) The Company shall, without cause, fail to perform or observe, in any material respect, any other material covenant, term, provision, condition, agreement or obligation of the Company under the Subscription Agreement, the terms of the Private Placement or this Debenture and such failure shall continue uncured for a period of thirty days after written notice from the Holder of such failure; or

(e) The Company shall (1) admit in writing its inability to pay its debts generally as they mature; (2) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (3) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or

(f) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or

(g) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within sixty (60) days thereafter; or

(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (60) days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; or

(i) Upon a properly noticed Notice of Conversion, the Company fails to deliver Conversion Shares, when lawful to do so, within 10 Trading Days of such Notice of Conversion.

Then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default), at the option of the Holder, and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law.

13. Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof.

14. In no event shall the Holder be permitted to convert this Debenture for shares of Common Stock to the extent that (x) the number of shares of Common Stock beneficially owned by such Holder (other than shares of Common Stock issuable upon conversion of this Debenture) plus (y) the number of shares of Common Stock issuable upon conversion of this Debenture, would be equal to or exceed 4.9% of the number of shares of Common Stock then issued and outstanding, including shares issuable upon conversion of this Debenture held by such Holder after application of this Paragraph 14. As used herein, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. To the extent that the limitation contained in this Paragraph 14 applies, the determination of whether this Debenture is convertible (in relation to other securities owned by the Holder) and of which a portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder's determination of whether this Debenture is convertible (in relation to other securities owned by such holder) and of which portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a holder to convert this Debenture into shares of Common Stock at such time as such conversion will not violate the provisions of this Paragraph 14. The provisions of this Paragraph 14 may be waived by the Holder of this Debenture upon, at the election of the Holder, not less than 75 days' prior notice to the Company, and the provisions of this Paragraph 14 shall continue to apply until such 75th day

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(or such later date as may be specified in such notice of waiver). No conversion of this Debenture in violation of this Paragraph 14 but otherwise in accordance with this Debenture shall affect the status of the Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. If instead of receiving cash on the Maturity Date the Holder instead exercises its right to convert this Debenture into Common Stock pursuant to Paragraph 3 by delivery of a Notice of Conversion prior to receipt of payment, and such conversion would cause the limit contained in the first sentence of this Paragraph 14 to be exceeded, such conversion of this Debenture shall occur up to such limit and the remaining unconverted portion of this Debenture shall be converted into Common Stock (1) in accordance with one or more Notices of Conversion delivered by the Holder, or (2) 65 days after the Maturity Date, whichever is earlier. Notwithstanding anything contained herein to the contrary, no interest shall accrue after the Maturity Date on any such unconverted portion of this Debenture.

15. Consent of a two-thirds majority of the holders of the Company's Debentures will be required for (i) any sale by the Company of substantially all of its assets unless the proceeds of such sale are used to repay the debentures,
(ii) any merger of the Company with another entity, where the Company is not the surviving corporation, unless part of such transaction the Debentures will be repaid, or (iii) certain other actions materially affecting the Debentures that require approval of the Debentures holders under the corporations laws of the State of Nevada.

16. By its acceptance of this Debenture, the Holder agrees to be bound by the applicable terms of the Subscription Agreement and the Private Placement.

[signature page follows]

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IN WITNESS WHEREOF, Borrower has caused this Debenture to be signed in its name by its duly authorized officer this _______ day of ______________, 2005.

Peak Entertainment Holdings, Inc.

By:

Wilf Shorrocks President and Chief Executive Officer

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EXHIBIT A

NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to Convert the Debentures)

The undersigned hereby irrevocably elects to convert $ ________________ of the principal amount of the above Debenture No. ___ into Shares of Common Stock of Peak Entertainment Holdings, Inc. (the "Company") according to the conditions hereof, as of the date written below.

Date of Conversion:

Conversion Price:

Accrued Interest:

Number of Shares of Common Stock to be Issued:

Name:

Signature:

Address:

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[FORM OF STOCK PURCHASE WARRANT]

THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE SET FORTH HEREIN, OR IN THE SECURITIES PURCHASE AGREEMENT, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

PEAK ENTERTAINMENT HOLDINGS, INC.

COMMON STOCK PURCHASE WARRANT
RIGHT TO PURCHASE [____________] SHARES OF COMMON STOCK
EXERCISE PRICE: $0.30 PER SHARE

Warrant No. [___]

THIS CERTIFIES THAT, for value received,

____________________________________ (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the closing of the related Securities Purchase Agreement (the "Initial Exercise Date") entered into Peak Entertainment Holdings, Inc., a Nevada corporation (the "Company") and the Holder, as of even date, and on or prior to the close of business on the fifth year anniversary of this Warrant (the "Termination Date"), but not thereafter, to subscribe for and purchase from the Company, up to
[_________] fully paid and nonassessable shares of the Company's Common Stock (the "Common Stock"), at the exercise price of $0.30 per share (the "Exercise Price"). The Exercise Price and the number of shares for which this Warrant is exercisable shall be subject to adjustment as provided herein. This Warrant is issued pursuant to a private placement for the sale of up to 400 Units of debentures and warrants (the "Private Placement"). In the event of any conflict between the terms of this Warrant and the terms set forth in the Private Placement documents, this Warrant shall control. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Private Placement Memorandum in connection with the Private Placement.

1. Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto, properly endorsed.

2. Authorization of Shares. The Company covenants that all shares of Common Stock which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3. Exercise of Warrant. Except as provided in Sections 4 and 5 herein, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date, and before the close of business on the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto, duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company) and upon payment of the Exercise Price of the shares thereby purchased by wire transfer or cashier's check drawn on a United States bank, the holder of this Warrant shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. Certificates for shares purchased hereunder shall be delivered to the Holder hereof within three (3) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date this Warrant has been exercised by payment to, and receipt thereof by, the Company of the Exercise Price and all taxes required to be paid by Holder, if any, pursuant to Section 5 herein prior to the issuance of such shares. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which new warrant shall in all other respects be identical with this Warrant.

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4. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the Exercise Price.

5. Limitation on Exercise of Warrant. In no event shall the Holder be permitted to exercise this Warrant for shares of Common Stock in excess of the amount of this Warrant upon the exercise of which, (x) the number of shares of Common Stock beneficially owned by such Holder (other than shares of Common Stock issuable upon exercise of this Warrant) plus (y) the number of shares of Common Stock issuable upon exercise of this Warrant, would be equal to or exceed 4.9% of the number of shares of Common Stock then issued and outstanding, including shares issuable upon exercise of this Warrant held by such Holder after application of this Section 5. As used herein, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. To the extent that the limitation contained in this Section 5 applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and which portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder's determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to exercise this Warrant into shares of Common Stock at such time as such exercise will not violate the provisions of this
Section 5. The provisions of this Section 5 may be waived by the Holder of this Warrant upon not less than 75 days' prior notice to the Company, and the provisions of this Section 5 shall continue to apply until such 75th day (or such later date as may be specified in such notice of waiver). No exercise of this Warrant in violation of this Section 5, but otherwise in accordance with this Warrant, shall affect the status of the Common Stock issued upon such exercise as validly issued, fully-paid and nonassessable.

6. Charges, Taxes and Expenses. Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder of this Warrant, or in such name or names as may be directed by the holder of this Warrant; provided, however, that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder of this Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto, duly executed by the Holder hereof; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

7. Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant.

8. Transfer, Division and Combination.

(a) Subject to compliance with any applicable securities laws, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new warrant or warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. This Warrant, if properly assigned, may be exercised by a new holder for the purchase of shares of Common Stock without having a new warrant issued.

(b) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by Holder or its agent or attorney. Subject to compliance with Section 8(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this
Section 8.

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(d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

9. No Rights as Shareholder until Exercise. This Warrant does not entitle the Holder hereof to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

10. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant certificate or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

12. Adjustments of Exercise Price and Number of Warrant Shares.

(a) Stock Splits, etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In the event that the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, (iv) issue any shares of its capital stock in a reclassification of the Common Stock, or (v) otherwise transacts a similar adjustment to its class of Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant and the Exercise Price immediately prior thereto shall be adjusted so that the holder of this Warrant shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which the holder would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the holder of this Warrant shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

(b) Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of shares of Common Stock for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, "common stock of the successor or acquiring corporation" shall include stock of such corporation of

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any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are exercisable into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

(c) Adjustment for Spin Off. If, for any reason, prior to the exercise of this Warrant in full, the Company spins off or otherwise divests itself of a part of its business or operations or disposes all or a part of its assets in a transaction (the "Spin Off") in which the Company does not receive compensation for such business, operations or assets, but causes securities of another entity (the "Spin Off Securities") to be issued to security holders of the Company, then

(A) the Company shall cause (i) to be reserved Spin Off Securities equal to the number thereof which would have been issued to the Holder had all of the Holder's unexercised Warrants outstanding on the record date (the "Record Date") for determining the amount and number of Spin Off Securities to be issued to security holders of the Company (the "Outstanding Warrants") been exercised as of the close of business on the trading day immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the exercise of all or any of the Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction, of which (I) the numerator is the amount of the Outstanding Warrants then being exercised, and (II) the denominator is the amount of the Outstanding Warrants; and

(B) the Exercise Price on the Outstanding Warrants shall be adjusted immediately after consummation of the Spin Off by multiplying the Exercise Price by a fraction (if, but only if, such fraction is less than 1.0), the numerator of which is the average Closing Bid Price of the Common Stock for the five (5) trading days immediately following the fifth trading day after the Record Date, and the denominator of which is the average Closing Bid Price of the Common Stock on the five (5) trading days immediately preceding the Record Date; and such adjusted Exercise Price shall be deemed to be the Exercise Price with respect to the Outstanding Warrants after the Record Date.

(d) Dilution. The Exercise Price of this Warrant shall be adjusted for dilutive issuances of securities for value by the Company which shall constitute a Dilution Event, as defined herein. The term "Dilution Event" shall mean any issuance by the Company for the Company's common stock or convertible in to the Company's common stock (excluding securities issued to the Company's employees, directors, consultants and others similarly situtated in the ordinary course of business and not for capital raising purposes) below the lower of (a) $.30 per common share, or (b) fair market value for such securities as determined at the time of issuance. Upon the occurrence of a Dilution Event, appropriate and proportionate adjustments shall be made to the Exercise Price. The good faith determination by the Board of Directors as to what adjustments, amendments or arrangements shall be made to the Exercise Price, and the extent thereof, shall be final and conclusive, provided that the Exercise is adjusted in a manner that is no less favorable than the manner of adjustment used as to any other person with similar adjustment rights. Any adjustment of the Exercise Price shall be made in increments of $0.01, and no adjustment of the Exercise Price shall be made unless such adjustment would result in a change in the Exercise Price of at least $0.01 at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than a $0.01 change in such Exercise Price. For a period of up to two years from the date of original issuance of this Warrant, the Exercise Price shall be subject to full ratchet antidilution protection; and, thereafter until the expiration of the Warrant, the Exercise Price shall be subject to weighted-average antidilution protection, so that the adjusted Exercise Price is calculated as follows:

A = (B + C) /(B +D) multiplied by E, where

A = post-adjusted Exercise Price
B = total shares outstanding before the Dilution Event C = total consideration paid in Dilution Event D = total shares issued in Dilution Event E = initial Exercise Price of this Warrant.

13. Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

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14. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall promptly send notice to the holder of this Warrant notice of such adjustment or adjustments setting forth the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. Such notice, in the absence of manifest error, shall be conclusive evidence of the correctness of such adjustment.

15. Redemption. Prior to the Termination Date, the Warrant shall be redeemable, under the circumstances described in this Section, at the discretion of the Company, for $.10 per warrant (the "Redemption Fee"). The Company's right to redemption shall be exercisable commencing upon the day following the tenth consecutive business day during which the Company's common stock has traded at prices of, or in excess of, $1.00 per share, subject to adjustment for stock splits, dividends, subdivisions, reclassification and the like, with weekly volume of such trading being in excess of the total number of shares represented by this Warrant. In the event the Company exercises its right to redeem the Warrants, the Company shall give the Holder written notice of such decision. In the event that the Holder does not exercise all or any part of the Warrants or that the Company does not receive the Warrant from the Holder within 30 days from the date on the notice to the Holder of the Company's intention to redeem the Warrant, then the Warrant shall be deemed canceled, and the Holder shall not be entitled to further exercise thereof or to the Redemption Fee.

16. Notice of Corporate Action. If at any time:

(a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to the Holder (i) at least 30 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 30 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to the Holder at the last address of the Holder appearing on the books of the Company and delivered in accordance with Section 18(d).

17. Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the OTCBB or other market upon which the Common Stock may be listed.

The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of

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this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (b) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

18. Miscellaneous.

(a) Jurisdiction. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of New York without regard to its conflict of law, principles or rules, and be subject to governing law provisions set forth in the Securities Purchase Agreement.

(b) Restrictions. The holder hereof acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

(c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company fails to comply with any provision of this Warrant, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(d) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder hereof by the Company shall be delivered in accordance with the notice provisions of the Securities Purchase Agreement.

(e) Limitation of Liability. No provision hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.

(g) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h) Indemnification. The Company agrees to indemnify and hold harmless the Holder from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against the Holder in any manner relating to or arising out of any failure by the Company to perform or observe in any material respect any of its covenants, agreements, undertakings or obligations set forth in this Warrant; provided, however, that the Company will not be liable hereunder to the extent that any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are found in a final non-appealable judgment by a court to have resulted from the holder's negligence, bad faith or willful misconduct in its capacity as a stockholder or warrantholder of the Company.

(i) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(j) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

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(k) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

(l) Piggyback Registration Rights. The initial Holder of this Warrant is entitled to the benefit of certain registration rights with respect to the shares of Common Stock issuable upon the exercise of this Warrant until such time that the shares are eligible for trading under Rule 144. If the Company, at any time from the date of this Warrant through the date of expiration of this Warrant, proposes to register any of its securities under the Securities Act for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Forms S-4, S-8 and any successor forms thereto), each such time the Company will give written notice to such effect to the Holder at least 30 days prior to such filing. Upon the written request of Holder, received by the Company within 30 days after the giving of any such notice by the Company, to register any of the shares of Common Stock underlying this Warrant, the Company will cause, at Company's expenses, such underlying shares of Common Stock to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition by the holder of such shares so registered.

[signature page follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: __________ __, 2005

Peak Entertainment Holdings, Inc.

By:

Wilf Shorrocks President and Chief Executive Officer

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NOTICE OF EXERCISE

To: Peak Entertainment Holdings, Inc.

The undersigned hereby elects to purchase ________ shares of Common Stock (the "Common Stock"), at an exercise price of $0.30 per share, of Peak Entertainment Holdings, Inc. pursuant to the terms of the attached Warrant, Warrant No. [_______], and tenders herewith payment of the exercise price in full, in the amount of $_____________, together with all applicable transfer taxes, if any.

Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:


(Name)


(Address)


Dated:


Signature

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

--------------------------------------------------------------------------------
whose address is                                                               .
                 --------------------------------------------------------------


Dated:
      ---------------------


                           Holder's Signature:       ___________________________

                           Holder's Address:         ___________________________

                                                     ___________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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[FORM OF SECURITY AGREEMENT]

SECURITY AGREEMENT (this "Agreement"), dated as of _____________, 2005, by and among Peak Entertainment Holdings, Inc., a Nevada corporation (the "Company"), and the secured party signatory hereto and its respective endorsees, transferees and assigns (the "Secured Party").

W I T N E S S E T H:

WHEREAS, pursuant to a Subscription Agreement between the Company and the Secured Party (the "Subscription Agreement"), the Company has agreed to issue to the Secured Party and other persons who enter into a similar Subscription Agreement (collectively the Secured Party and others similarly situated are referred to hereinafter as the "Secured Parties"), and the Secured Party has agreed to purchase from the Company certain of the Company's 12% Secured Convertible Debentures (the "Debentures"), which are convertible into shares of the Company's Common Stock, par value $.001 per share (the "Common Stock"); and

WHEREAS, in order to induce the Secured Parties to purchase the Debentures, the Company has agreed to execute and deliver to the Secured Parties, this Agreement for the benefit of the Secured Parties and to grant to the Secured Parties a security interest, to the extent not already encumbered, in certain property of the Company to secure the prompt payment, performance and discharge in full of all of the Company's obligations under the Debentures.

NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as "general intangibles" and "proceeds") shall have the respective meanings given such terms in Article 9 of the UCC.

(a) "Collateral" means the collateral in which the Secured Party is granted a security interest by this Agreement and which shall include the following, whether presently owned or existing or hereafter acquired or coming into existence, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any tort claims in connection therewith:

(i) All Goods of the Company, including, without limitations, all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with the Company's businesses and all improvements thereto (collectively, the "Equipment");

(ii) All Inventory of the Company, less inventory to the extent that CK's Supermarket Limited of 64/65 The Kingsway, Swansea SA1 5HW maintains security interests in inventory pursuant to an agreement for a loan made July 10, 2002;

(iii) All of the Company's contract rights and general intangibles, including, without limitation, all partnership interests, stock or other securities, licenses, distribution and other agreements, computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, trademarks, service marks, trade styles, trade names, patents, patent applications, copyrights, deposit accounts, and income tax refunds (collectively, the "General Intangibles");

(iv) All of the Company's documents, instruments and chattel paper, files, records, books of account, business papers, computer programs and the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(iv) above; and

(v) All of the Company's shares of stock of the subsidiaries of the Company, including, without limitation, all of the Company's shares of stock of Peak Entertainment, Ltd.

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(b) "Company" shall mean, collectively, the Company and all of the subsidiaries of the Company.

(c) "Obligations" means all of the Company's obligations under this Agreement and the Debentures, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later decreased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Secured Party as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.

(d) "UCC" means the Uniform Commercial Code, as currently in effect in the State of New York.

2. Grant of Security Interest. As an inducement for the Secured Party to purchase the Debentures and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, the Company hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the Secured Party, a continuing security interest, to the extent not already encumbered, in, a continuing lien upon, a right to possession and disposition of and a right of set-off against, in each case to the fullest extent permitted by law, all of the Company's right, title and interest of whatsoever kind and nature (including, without limitation, all of Peak Entertainment Ltd.'s rights) in and to the Collateral (the "Security Interest"). The Security Interest rights herein shall be on an equal level to the security interest rights granted to other third-party purchasers in the Company's sale of debentures, on terms and conditions similar to the terms herein, occurring on or about the same time as this Agreement. Notwithstanding anything to the contrary herein, the parties understand and agree that the Security Interest rights herein shall be secondary to any security interest rights previously granted by the Company, and that the provisions of this Agreement shall be interpreted accordingly. The Company shall be entitled to grant security interest rights senior to the rights of the Secured Parties to a financial institution, subject to the approval of a two-thirds majority of the Secured Parties, which shall not be unreasonably withheld. The Company shall be entitled to grant security interest rights similar to the rights granted to the Secured Parties to non-financial institution lender(s) hereafter providing at least $1,500,000 or more in working capital, subject to the approval of a two-thirds majority of the Secured Parties, which shall not be unreasonably withheld. Secured Parties acknowledge that the Company will need additional capital for its business. Except as provided for herein, the Company will not grant to any other person a security interest in its assets for so long as a majority of the Debentures sold to the Secured Parties remain outstanding, except with the consent of two-thirds of the outstanding face amount of the Debentures held by the Secured Parties, which shall not be unreasonably withheld.

3. Representations, Warranties, Covenants and Agreements of the Company. The Company represents and warrants to, and covenants and agrees with, the Secured Party as follows:

(a) This Agreement constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor's rights generally.

(b) The Company represents and warrants that its principal place of business is set forth in the Company's filings with the Securities and Exchange Commission that that it has no place of business or offices where its respective books of account and records are kept (other than temporarily at the offices of its attorneys or accountants) or places where Collateral is stored or located;

(c) The Company is the sole owner of the Collateral (except for licenses granted by the Company in the ordinary course of business), free and clear of any liens, security interests, encumbrances, rights or claims, and is fully authorized to grant the Security Interest in and to pledge the Collateral, subject to the surrender and cancellation of previously issued debentures. Subject to the surrender and cancellation of previously issued debentures, there is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that have been filed in favor of any secured party pursuant to this Agreement or similar agreements) covering or affecting any of the Collateral.

(d) No part of the Collateral has been judged invalid or unenforceable. There has been no adverse decision to the Company's claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to the Company's right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving said rights pending or, to the best knowledge of the Company, threatened before any court, judicial body, administrative or regulatory agency, arbitrator or other governmental authority.

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(e) The Company shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and may not relocate such books of account and records or tangible Collateral unless it delivers to the Secured Party at least 30 days prior to such relocation (i) written notice of such relocation and the new location thereof (which must be within the United States) and
(ii) evidence that appropriate financing statements and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interest to create in favor of the Secured Party valid, perfected and continuing liens in the Collateral.

(f) This Agreement creates in favor of the Secured Party a valid security interest in the Collateral securing the payment and performance of the Obligations and, upon making the filings described in the immediately following sentence, a perfected security interest in such Collateral. Subject to the surrender and cancellation of previously issued debentures, except for the filing of financing statements on Form-1 under the UCC with the appropriate jurisdictions, no authorization or approval of or filing with or notice to any governmental authority or regulatory body is required either (i) for the grant by the Company of, or the effectiveness of, the Security Interest granted hereby or for the execution, delivery and performance of this Agreement by the Company or (ii) for the perfection of or exercise by the Secured Party of its rights and remedies hereunder.

(g) The Company will prepare and deliver to the Secured Party one or more executed UCC financing statements on Form-1 with respect to the Security Interest for filing with the appropriate jurisdictions at the expense of the Company.

(h) The execution, delivery and performance of this Agreement does not conflict with or cause a breach or default, or an event that with or without the passage of time or notice, shall constitute a breach or default, under any agreement to which the Company is a party or by which the Company is bound. No consent (including, without limitation, from stockholders or creditors of the Company) is required for the Company to enter into and perform its obligations hereunder.

(i) The Company shall at all times maintain the liens and Security Interest provided for hereunder as valid and perfected priority liens and security interests in the Collateral in favor of the Secured Party until this Agreement and the Security Interest hereunder shall terminate pursuant to Section 8. The Company hereby agrees to defend the same against any and all persons. The Company shall safeguard and protect all Collateral for the account of the Secured Party. At the request of the Secured Party, the Company will sign and deliver to the Secured Party at any time or from time to time one or more financing statements pursuant to the UCC (or any other applicable statute) in form reasonably satisfactory to the Secured Party and will pay the cost of filing the same in all public offices wherever filing is, or is reasonably deemed by the Secured Party to be, necessary or desirable to effect the rights and obligations provided for herein.

(j) The Company shall keep and preserve its Equipment, Inventory and other tangible Collateral in good condition, repair and order and shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.

(k) The Company shall promptly execute and deliver to the Secured Party such further deeds, mortgages, assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such further action as the Secured Party may from time to time reasonably request and may in its sole discretion deem necessary to perfect, protect or enforce its security interest in the Collateral including, without limitation, the execution and delivery of a separate security agreement with respect to the Company's intellectual property ("Intellectual Property Security Agreement") in which the Secured Party has been granted a security interest hereunder, substantially in a form acceptable to the Secured Party, which Intellectual Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions hereof.

(l) The Company will take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes of action and accounts receivable in respect of the Collateral.

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(m) All information heretofore, herein or hereafter supplied to the Secured Party by or on behalf of the Company with respect to the Collateral is accurate and complete in all material respects as of the date furnished.

4. Defaults. The following events shall be "Events of Default": The occurrence of an Event of Default (as defined in the Debentures) under the Debentures.

5. Rights and Remedies Upon Default. Upon occurrence of any Event of Default and at any time thereafter, the Secured Party shall have the right to exercise all of the remedies conferred hereunder and under the Debentures, and the Secured Party shall have all the rights and remedies of a secured party under the UCC and/or any other applicable law (including the Uniform Commercial Code of any jurisdiction in which any Collateral is then located).

6. Responsibility for Collateral. The Company assumes all liabilities and responsibility in connection with all Collateral, and the obligations of the Company hereunder or under the Debentures shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability for any reason.

7. Security Interest Absolute. All rights of the Secured Party and all Obligations of the Company hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Debentures, or any agreement entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Debentures, or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guaranty, or any other security, for all or any of the Obligations; (d) any action by the Secured Party to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to the Company, or a discharge of all or any part of the Security Interest granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Party shall continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy. The Company expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral or any payment received by the Secured Party hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Party, then, in any such event, the Company's obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. The Company waives all right to require the Secured Party to proceed against any other person or to apply any Collateral which the Secured Party may hold at any time, or to marshal assets, or to pursue any other remedy. The Company waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.

8. Term of Agreement. This Agreement and the Security Interest shall terminate on the date on which all payments under the Debentures have been made in full and all other Obligations have been paid or discharged. Upon such termination, the Secured Party, at the request and at the expense of the Company, will join in executing any termination statement with respect to any financing statement executed and filed pursuant to this Agreement.

9. Power of Attorney; Further Assurances.

(a) The Company authorizes the Secured Party, and does hereby make, constitute and appoint it, and its respective officers, agents, successors or assigns with full power of substitution, as the Company's true and lawful attorney-in-fact, with power, in its own name or in the name of the Company, to, after the occurrence and during the continuance of an Event of Default, (i) to sign and endorse any UCC financing statement relating to the Collateral; (ii) to pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; and
(iii) generally, to do, at the option of the Secured Party, at any time, or from time to time, all acts and things which the Secured Party deems necessary to protect and preserve the Collateral and the Security Interest granted therein in order to effect the intent of this Agreement and the Debentures, as fully and effectually as the Company might or could do; and the Company hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding.

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(b) On a continuing basis, the Company will make, execute, acknowledge, deliver, file and record, as the case may be, in the proper filing and recording places in any jurisdiction, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the Secured Party, to perfect the Security Interest granted hereunder and otherwise to carry out the intent and purposes of this Agreement, or for assuring and confirming to the Secured Party the grant or perfection of a security interest in all the Collateral.

(c) The Company hereby irrevocably appoints the Secured Party as the Company's attorney-in-fact, with full authority in the place and stead of the Company and in the name of the Company, from time to time in the Secured Party's discretion, to take any action and to execute any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to the Collateral without the signature of the Company where permitted by law.

10. Notices. All notices, requests, demands and other communications hereunder shall be in writing, with copies to all the other parties hereto, and shall be deemed to have been duly given when (i) if delivered by hand, upon receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt requested), the next business day or (iv) if mailed by first-class registered or certified mail, return receipt requested, postage prepaid, four days after posting in the U.S. mails, in each case if delivered to the following addresses:

If to the Company:


Attn.: Wilfred Shorrocks, President
Peak Entertainment Holdings, Inc.
Bagshaw Hall, Bagshaw Hill
Bakewell, Derbyshire, UK DE45 1DL
Tel: +44(0)1629 814555
Fax: +44(0)1629 813539

With a copy to (which shall not constitute notice):
Attn: Dan Brecher
Law Offices of Dan Brecher
99 Park Avenue, 16th Floor
New York, New York 10016
Tel: (212) 286-0747
Fax: (212) 808-4155

If to the Secured Party:
At the address and facsimile number as provided pursuant
to the Subscription Agreement.

11. Other Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Secured Party shall have the right, in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of the Secured Party's rights and remedies hereunder.

12. Miscellaneous.

(a) No course of dealing between the Company and the Secured Party, nor any failure to exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or privilege hereunder or under the Debentures shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

(b) All of the rights and remedies of the Secured Party with respect to the Collateral, whether established hereby or by the Debentures or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

(c) This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and is intended to supersede all prior negotiations, understandings and agreements with

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respect thereto. Except as specifically set forth in this Agreement, no provision of this Agreement may be modified or amended except by a written agreement specifically referring to this Agreement and signed by the parties hereto.

(d) In the event that any provision of this Agreement is held to be invalid, prohibited or unenforceable in any jurisdiction for any reason, unless such provision is narrowed by judicial construction, this Agreement shall, as to such jurisdiction, be construed as if such invalid, prohibited or unenforceable provision had been more narrowly drawn so as not to be invalid, prohibited or unenforceable. If, notwithstanding the foregoing, any provision of this Agreement is held to be invalid, prohibited or unenforceable in any jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of such invalidity, prohibition or unenforceability without invalidating the remaining portion of such provision or the other provisions of this Agreement and without affecting the validity or enforceability of such provision or the other provisions of this Agreement in any other jurisdiction.

(e) No waiver of any breach or default or any right under this Agreement shall be deemed a waiver of any subsequent breach or default or right, whether of the same or similar nature or otherwise.

(f) This Agreement shall be binding upon and inure to the benefit of each party hereto and its successors and assigns.

(g) Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry out the provisions and purposes of this Agreement.

(h) This Agreement shall be construed in accordance with the laws of the State of New York, except to the extent the validity, perfection or enforcement of a security interest hereunder in respect of any particular Collateral which are governed by a jurisdiction other than the State of New York in which case such law shall govern. Each of the parties hereto irrevocably submit to the exclusive jurisdiction of any state or federal court sitting in New York County in the State of New York over any action or proceeding arising out of or relating to this Agreement, and the parties hereto hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such state or federal court. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The parties hereto further waive any objection to venue in the State of New York and any objection to an action or proceeding in the State of New York on the basis of forum non conveniens.

(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

(j) This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.

THE COMPANY:                     PEAK ENTERTAINMENT HOLDINGS, INC.


                                 By:
                                    -----------------------------------------
                                          Wilf Shorrocks
                                          President and Chief Executive Officer

THE SECURED PARTY: __________________________

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[FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT]

Intellectual Property Security Agreement (this "Agreement") dated as of _____________, 2005, by and among Peak Entertainment Holdings, a Nevada corporation (the "Company"), and the secured party signatory hereto and its respective endorsees, transferees and assigns (the "Secured Party").

W I T N E S S E T H :

WHEREAS, pursuant to a Subscription Agreement between the Company and the Secured Party (the "Subscription Agreement"), the Company has agreed to issue to the Secured Party and other persons who enter into a similar Subscription Agreement (collectively the Secured Party and others similarly situated are referred to hereinafter as the "Secured Parties"), and the Secured Party has agreed to purchase from the Company certain of the Company's 12% Secured Convertible Debentures (the "Debentures"), which are convertible into shares of the Company's Common Stock, par value $.001 per share (the "Common Stock"); and

WHEREAS, in order to induce the Secured Parties to purchase the Debentures, the Company has agreed to execute and deliver to the Secured Parties, this Agreement for the benefit of the Secured Parties and to grant to the Secured Parties a security interest, to the extent not already encumbered, in certain property of the Company to secure the prompt payment, performance and discharge in full of all of the Company's obligations under the Debentures.

NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Subscription Agreement and used herein are so used as so defined; and the following terms shall have the following meanings:

"Company" shall mean, collectively, the Company and all of the subsidiaries of the Company (including, without limitation, Peak Entertainment, Ltd.).

"Copyrights" shall mean (a) all copyrights, registrations and applications for registration, issued or filed, including any reissues, extensions or renewals thereof, by or with the United States Copyright Office or any similar office or agency of the United States, any state thereof, or any other country or political subdivision thereof, or otherwise, including, all rights in and to the material constituting the subject matter thereof, and (b) any rights in any material which is copyrightable or which is protected by common law, United States copyright laws or similar laws or any law of any State.

"Copyright License" shall mean any agreement, written or oral, providing for a grant by the Company of any right in any Copyright.

"Intellectual Property" shall means, collectively, the Software Intellectual Property, Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark Licenses and Trade Secrets of the Company, as set forth in Schedule A hereto.

"Obligations" means all of the Company's obligations under this Agreement and the Debentures, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later decreased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Secured Party as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.

"Patents" shall mean (a) all letters patent of the United States or any other country or any political subdivision thereof, and all reissues and extensions thereof, and (b) all applications for letters patent of the United States and all divisions, continuations and continuations-in-part thereof or any other country or any political subdivision.

"Patent License" shall mean all agreements, whether written or oral, providing for the grant by the Company of any right to manufacture, use or sell any invention covered by a Patent.

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"Security Agreement" shall mean the Security Agreement, dated the date hereof between the Company and the Secured Party.

"Software Intellectual Property" shall mean:

(a) all software programs (including all source code, object code and all related applications and data files), whether now owned, upgraded, enhanced, licensed or leased or hereafter acquired by the Company, above;

(b) all computers and electronic data processing hardware and firmware associated therewith;

(c) all documentation (including flow charts, logic diagrams, manuals, guides and specifications) with respect to such software, hardware and firmware described in the preceding clauses (a) and (b); and

(d) all rights with respect to all of the foregoing, including, without limitation, any and all upgrades, modifications, copyrights, licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and substitutions, replacements, additions, or model conversions of any of the foregoing.

"Trademarks" shall mean all trademarks, trade names, corporate names, the Company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing.

"Trademark License" shall mean any agreement, written or oral, providing for the grant by the Company of any right to use any Trademark.

"Trade Secrets" shall mean common law and statutory trade secrets and all other confidential or proprietary or useful information and all know-how obtained by or used in or contemplated at any time for use in the business of the Company (all of the foregoing being collectively called a "Trade Secret"), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses, and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.

2. Grant of Security Interest. In accordance with Section 3(m) of the Security Agreement, to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, the Company hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the Secured Party, a continuing security interest in, a continuing lien upon, an unqualified right to possession and disposition of and a right of set-off against, in each case to the fullest extent permitted by law, all of the Company's right, title and interest of whatsoever kind and nature (including, without limitation, all of Peak Entertainment Ltd.'s rights) in and to the Intellectual Property (the "Security Interest"). The Security Interest rights herein shall be on equal level to the other security interest rights granted to third-party purchasers in the Company's sale of debentures, on terms and conditions similar to the terms herein. Notwithstanding anything to the contrary herein or in the Security Agreement, the parties understand and agree that the Security Interest rights herein shall be secondary to any security interest rights previously granted by the Company, including those granted in or about January 2005, and that the provisions of this Agreement shall be interpreted accordingly. The Company shall be entitled to grant security interest rights senior to the rights of the Secured Parties to a financial institution, subject to the approval of a two-thirds majority of the Secured Parties, which shall not be unreasonably withheld. The Company shall be entitled to grant security interest rights similar to the rights granted to the Secured Parties to non-financial institution lender(s) hereafter providing a total of at least $1,000,000 or more in working capital, subject to the approval of a two-thirds majority of the Secured Parties, which shall not be unreasonably withheld. Secured Parties acknowledge that the Company will need additional capital for its business. Except as provided for herein, the Company will not grant to any other person a security interest in its assets for so long as a majority of the Debentures sold to the Secured Parties remain outstanding, except with the consent of two-thirds of the outstanding face amount of the Debentures held by the Secured Parties, which shall not be unreasonably withheld.

3. Representations and Warranties. The Company hereby represents and warrants, and covenants and agrees with, the Secured Party as follows:

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(a) The Company has the requisite corporate power and authority to enter into this Agreement and otherwise to carry out its obligations thereunder. The execution, delivery and performance by the Company of this Agreement and the filings contemplated therein have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company. This Agreement constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor's rights generally.

(b) The Company represents and warrants that it has no place of business or offices where its respective books of account and records are kept (other than temporarily at the offices of its attorneys or accountants) or places where the Intellectual Property is stored or located.

(c) The Company is the sole owner of the Intellectual Property (except for licenses granted by the Company in the ordinary course of business), and is fully authorized to grant the Security Interest in and to pledge the Intellectual Property, subject to the surrender and cancellation of previously issued debentures. Subject to the surrender and cancellation of previously issued debentures, there is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that have been filed in favor of the Secured Party pursuant to this Agreement) covering or affecting any of the Intellectual Property.

(d) The Company shall at all times maintain its books of account and records relating to the Intellectual Property at its principal place of business and may not relocate such books of account and records unless it delivers to the Secured Party at least 30 days prior to such relocation (i) written notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that the necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interest to create in favor of the Secured Party valid, perfected and continuing liens in the Intellectual Property to the extent they can be perfected through such filings.

(e) This Agreement creates in favor of the Secured Party a valid security interest in the Intellectual Property securing the payment and performance of the Obligations and, upon making the filings required hereunder, a perfected security interest in such Intellectual Property to the extent that it can be perfected through such filings, and subject to the other and prior security interests to such Intellectual Property.

(f) Upon request of the Secured Party, the Company shall execute and deliver any and all agreements, instruments, documents, and papers as the Secured Party may reasonably request to evidence the Secured Party's security interest in the Intellectual Property and the goodwill and general intangibles of the Company relating thereto or represented thereby, and the Company hereby appoints the Secured Party its attorney-in-fact to execute and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power being coupled with an interest is irrevocable until the Obligations have been fully satisfied and are paid in full.

(g) The execution, delivery and performance of this Agreement does not conflict with or cause a breach or default, or an event that with or without the passage of time or notice, shall constitute a breach or default, under any agreement to which the Company is a party or by which the Company is bound.

(h) The Company shall at all times maintain the liens and Security Interest provided for hereunder as valid and perfected liens and security interests in the Intellectual Property to the extent they can be perfected by filing in favor of the Secured Party until this Agreement and the Security Interest hereunder shall terminate pursuant to Section 8. The Company hereby agrees to defend the same against any and all persons. The Company shall safeguard and protect all Intellectual Property for the account of the Secured Party. Without limiting the generality of the foregoing, the Company shall pay all fees, taxes and other amounts necessary to maintain the Intellectual Property and the Security Interest hereunder, and the Company shall obtain and furnish to the Secured Party from time to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the Security Interest hereunder.

(i) The Company will take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes of action and accounts receivable in respect of the Intellectual Property.

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(j) All information heretofore, herein or hereafter supplied to the Secured Party by or on behalf of the Company with respect to the Intellectual Property is accurate and complete in all material respects as of the date furnished.

(k) With respect to any Intellectual Property:

(i) such Intellectual Property is subsisting and has not been adjudged invalid or unenforceable, in whole or in part;

(ii) such Intellectual Property is valid and enforceable; and

(iii) the Company is the owner of the right, title and interest in and to such Intellectual Property and no claim has been made that the use of such Intellectual Property infringes on the asserted rights of any third-party.

4. Defaults. The following events shall be "Events of Default": The occurrence of an Event of Default (as defined in the Debentures) under the Debentures.

5. Rights and Remedies Upon Default. Upon occurrence of any Event of Default and at any time thereafter, the Secured Party shall have the right to exercise all of the remedies conferred hereunder and under the Debentures, and the Secured Party shall have all the rights and remedies of a secured party under the UCC and/or any other applicable law (including the Uniform Commercial Code of any jurisdiction in which any Intellectual Property is then located).

6. Responsibility for Intellectual Property. The Company assumes all liabilities and responsibility in connection with all Intellectual Property, and the obligations of the Company hereunder or under the Debentures shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Intellectual Property or its unavailability for any reason.

7. Security Interest Absolute. All rights of the Secured Party and all Obligations of the Company hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Debentures, or any agreement entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Debentures, or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Intellectual Property, or any release or amendment or waiver of or consent to departure from any other Intellectual Property for, or any guaranty, or any other security, for all or any of the Obligations; (d) any action by the Secured Party to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with the Intellectual Property; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to the Company, or a discharge of all or any part of the Security Interest granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Party shall continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy. The Company expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Intellectual Property or any payment received by the Secured Party hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Party, then, in any such event, the Company's obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. The Company waives all right to require the Secured Party to proceed against any other person or to apply any Intellectual Property which the Secured Party may hold at any time, or to marshal assets, or to pursue any other remedy. The Company waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.

8. Term of Agreement. This Agreement and the Security Interest shall terminate on the date on which all payments under the Debentures have been made in full and all other Obligations have been paid or discharged. Upon such termination, the Secured Party, at the request and at the expense of the Company, will join in executing any termination statement with respect to any financing statement executed and filed pursuant to this Agreement.

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9. Power of Attorney; Further Assurances.

(a) The Company authorizes the Secured Party, and does hereby make, constitute and appoint it, and its respective officers, agents, successors or assigns with full power of substitution, as the Company's true and lawful attorney-in-fact, with power, in its own name or in the name of the Company, to, after the occurrence and during the continuance of an Event of Default, (i) to sign and endorse any UCC financing statement relating to the Intellectual Property; (ii) to pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Intellectual Property; and (iii) generally, to do, at the option of the Secured Party, at any time, or from time to time, all acts and things which the Secured Party deems necessary to protect and preserve the Intellectual Property and the Security Interest granted therein in order to effect the intent of this Agreement and the Debentures, as fully and effectually as the Company might or could do; and the Company hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding.

(b) On a continuing basis, the Company will make, execute, acknowledge, deliver, file and record, as the case may be, in the proper filing and recording places in any jurisdiction, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the Secured Party, to perfect the Security Interest granted hereunder and otherwise to carry out the intent and purposes of this Agreement, or for assuring and confirming to the Secured Party the grant or perfection of a security interest in the Intellectual Property.

(c) The Company hereby irrevocably appoints the Secured Party as the Company's attorney-in-fact, with full authority in the place and stead of the Company and in the name of the Company, from time to time in the Secured Party's discretion, to take any action and to execute any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Intellectual Property without the signature of the Company where permitted by law.

10. Notices. All notices, requests, demands and other communications hereunder shall be in writing, with copies to all the other parties hereto, and shall be deemed to have been duly given when (i) if delivered by hand, upon receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt requested), the next business day or (iv) if mailed by first-class registered or certified mail, return receipt requested, postage prepaid, four days after posting in the U.S. mails, in each case if delivered to the following addresses:

If to the Company:

Attn.: Wilfred Shorrocks, President

Peak Entertainment Holdings, Inc. Bagshaw Hall, Bagshaw Hill Bakewell, Derbyshire, UK DE45 1DL Tel: +44(0)1629 814555 Fax: +44(0)1629 813539

With a copy to (which shall not constitute notice):


Attn: Dan Brecher

Law Offices of Dan Brecher 99 Park Avenue, 16th Floor New York, New York 10016 Tel: (212) 286-0747
Fax: (212) 808-4155

If to the Secured Party:
At the address and facsimile number as provided pursuant to the Subscription Agreement.

11. Other Security. To the extent that the Obligations are now or hereafter secured by property other than the Intellectual Property or by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Secured Party shall have the right, in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of the Secured Party's rights and remedies hereunder.

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12. Miscellaneous.

(a) No course of dealing between the Company and the Secured Party, nor any failure to exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or privilege hereunder or under the Debentures shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

(b) All of the rights and remedies of the Secured Party with respect to the Intellectual Property, whether established hereby or by the Debentures or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

(c) This Agreement and the Security Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and is intended to supersede all prior negotiations, understandings and agreements with respect thereto. Except as specifically set forth in this Agreement, no provision of this Agreement may be modified or amended except by a written agreement specifically referring to this Agreement and signed by the parties hereto.

(d) In the event that any provision of this Agreement is held to be invalid, prohibited or unenforceable in any jurisdiction for any reason, unless such provision is narrowed by judicial construction, this Agreement shall, as to such jurisdiction, be construed as if such invalid, prohibited or unenforceable provision had been more narrowly drawn so as not to be invalid, prohibited or unenforceable. If, notwithstanding the foregoing, any provision of this Agreement is held to be invalid, prohibited or unenforceable in any jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of such invalidity, prohibition or unenforceability without invalidating the remaining portion of such provision or the other provisions of this Agreement and without affecting the validity or enforceability of such provision or the other provisions of this Agreement in any other jurisdiction.

(e) No waiver of any breach or default or any right under this Agreement shall be deemed a waiver of any subsequent breach or default or right, whether of the same or similar nature or otherwise.

(f) This Agreement shall be binding upon and inure to the benefit of each party hereto and its successors and assigns.

(g) Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry out the provisions and purposes of this Agreement.

(h) This Agreement shall be construed in accordance with the laws of the State of New York, except to the extent the validity, perfection or enforcement of a security interest hereunder in respect of any particular Intellectual Property which are governed by a jurisdiction other than the State of New York in which case such law shall govern. Each of the parties hereto irrevocably submit to the exclusive jurisdiction of any state or federal court sitting in the County of New York in the State of New York over any action or proceeding arising out of or relating to this Agreement, and the parties hereto hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such state or federal court. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The parties hereto further waive any objection to venue in the State of New York and any objection to an action or proceeding in the State of New York on the basis of forum non conveniens.

(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND

6

REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

(j) This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written.

THE COMPANY:                      PEAK ENTERTAINMENT HOLDINGS, INC.


                                  By:
                                     -----------------------------------------
                                          Wilf Shorrocks
                                          President and Chief Executive Officer

THE SECURED PARTY: __________________________

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SCHEDULE A

A. Software Intellectual Property: None.

B. Copyrights: None, other than any, if any, disclosed in filings with the S.E.C.

C. Copyright Licenses: None, other than any, if any, disclosed in filings with the S.E.C.

D. Patents: None.

E. Patent Licenses: None.

F. Trademarks: None, other than any, if any, disclosed in filings with the S.E.C.

G. Trademark Licenses: None, other than any, if any, disclosed in filings with the S.E.C.

H. Trade Secrets: None.

9

EXHIBIT 10.1

                   LICENCE AGREEMENT NUMBER PPC002 ..........

                                SUMMARY OF TERMS
The Licensee:                    Name:  Color Media International d.o.o
                              Address:  Dimitrja Avramovica 8
                                        21000 Novi Sad
                                        Serbia and Montenegro


                              Contact:  Miroslav Vajda (Business Development Manager)
                                  tel:  +381 21 621246 (mo +38163588180)
                                  fax:  +381 21 621151
                               e-mail:  mvajda@svet.co.yu

The Property:              Pretty Pony Club

The Principal:             W + P Shorrocks

The Licensor:              Peak Entertainment Ltd

The Products:              Monthly Comic with Covermount

Channels of Distribution:  All

The Territory:             Serbia and Montenegro

The Term:                  1st Feb 05 to 31st Jan 07

Advance Royalty:           (pound)5000 + Vat on signature

Guaranteed Royalty:        (pound)10,000 + VAT (includes above advance) paid quarterly over the term.

Royalty Rate:              5% of net selling price on all PPC publishing formats ,
                           5% of PPC toy  covermount  price supplied by Toontastic  manufactured  by
                           third party.


Number of Samples:         5 of each product MUST BE SUPPLIED


This LICENCE AGREEMENT is made this day 1st February 2005 Between:

THE PARTIES:

1. PEAK ENTERTAINMENT LTD whose registered office is at Bagshaw Hall,Bagshaw Hill, Bakewell, Derbyshire, DE45 1DL. ("the Licensor")

2. THE LICENSEE: whose full name and trading or registered address is Color Media International d.o.o , Dimititrija Avramovica 8, 21000 Novi Sad , Serbia and Montenegro.referred to on the Summary of Terms Sheet ("the Licensee")

RECITALS

(A) The Licensor controls all rights of exploitation in the Property.

(B) The Licensee wished to obtain a licence to manufacture, market, sell and distribute the Products incorporating the Property and the Licensor has agreed to grant such right.

1. DEFINITIONS

"The Intellectual Property" - means copyright, trade mark and other rights in the Property.

"FOB Price" - means the gross price at which the Licensee sells the Product in an arms length transaction to its customers in an overseas Territory less only normal trade discounts.

"Notice" - means notice in writing served in accordance with the provisions of sub-clause 15.4.

"The Royalties" - means the payments to be made to the Licensor by the Licensee under Clause 4.

"The Specifications" - means the specifications set out in the first schedule.

"The Style Guide" - means the documents provided by the Licensor to the Licensee from time to time giving details of the Property including the papers that have been given to the Licensee before the signing of this Agreement.

"Channels of Distribution" - means all channels of distribution


The words referred to in the first column of the Summary of Terms shall have the meanings attributed to them in the second column of the Summary of Terms Sheet.

2. GRANT

2.1 In consideration of the obligations undertaken by the Licensee under this Agreement the Licensor grants to the Licensee an exclusive licence to apply the Property to the manufacture, marketing, distribution and sale of the Products in the Territory in accordance with the Specifications and the Style Guide and under the terms of this Agreement in the Territory.

2.2 The Licensee shall only market and solicit orders for the Products in the Territory. If it receives orders for the supply of Products outside the Territory it will immediately inform the Licensor thereof.

2.3 The Licensor reserves the right to remove any of the Products listed in the Summary of Terms where they are not on sale to the trade in accordance with Clause 7.1 in any part of the Territory.

2.4 The Licensor reserves all rights not specifically granted herein including the right to grant licences of the Property to other licensees in the Territory in respect of other product categories.

2.5 The Licensor also reserves the right to request any third party to manufacture the Products for promotional purposes.

3. TERM

This Agreement shall be for the Term unless terminated earlier in accordance with Clause 10 herein.

4. ROYALTIES

4.1 In consideration of the rights granted by the Licensor the Licensee shall pay to the Licensor a royalty of the Agreed Percentage of the Net Selling Price of each unit of the Products sold by the Licensee (less only normal trade discounts). Upon the signing of this Agreement the Licensee shall pay to the Licensor the Advance Royalty which shall not in any circumstances be repayable either in whole or in part but which shall be set off against royalty payments payable during the Term of this Agreement. All payments made by the Licensee to the Licensor pursuant to this Agreement shall be made by telegraphic transfer to the following account:


Account: Peak Entertainment Ltd Bank: Lloyds TSB Bank Plc Account No: 2560768
Sort Code: 30-00-09

4.2 The Licensee shall within 30 days of the 30th March, 30th June, 30th September and 30th December in each year deliver to the Licensor a statement giving particulars of all sales of the Products effected by the Licensee since the last statement date (and in respect of the first statement; since the date of this Agreement) and showing the total royalty payable to the Licensor and at the same time deliver to the Licensor a remittance for the greater of the full amount of that royalty or an equal quarterly installment of the Guaranteed Royalty (less only the pro rata Advance applicable for the relevant quarter). The form of the statement is set out in the second Schedule.

4.3 If the Licensee's sales of the Product during the term or before the termination date (Clause 10) if sooner are insufficient to generate royalties equal to the Guaranteed Royalty at the end of the Term, or termination date (Clause 10), whichever the sooner, the Licensee shall pay to the Licensor the difference between royalties generated throughout the Term or before the termination date (Clause 10) if sooner and the Guaranteed Royalty.

4.4 The Licensee shall keep and maintain separate and detailed accurate accounts and records so as to show the quantity and Net Selling Price of Products sold, used or otherwise disposed of by the Licensee for each royalty period giving separately the figures for each product. The Licensor shall have the right at reasonable hours, and on giving the Licensee reasonable notice, to appoint a representative (being a qualified, certified or chartered accountant) to audit the said accounts and records and if such audit reveals a discrepancy it shall be collected forthwith. It is further agreed that if such discrepancy is 5% or more in the Licensee's favour, the Licensee shall within 14 days of the date of the relevant invoice pay the Licensor's reasonable auditing fees and expenses in addition to any other payments due and interest on the discrepancy at 4% above the base lending rate from time to time of Lloyds TSB Bank Plc.

4.5 All sums payable by the Licensee to any person pursuant to this Agreement shall be paid free and clear of all deductions (except normal trade discounts) or withholdings whatsoever, save only as may be required by any applicable law.


5. SPECIFICATION AND QUALITY

5.1 The Licensee shall manufacture the Products according to the Specifications and the Style Guide or such other specifications as the Licensor may from time to time substitute and at all times ensure that the Products are of the highest quality attainable within the Specifications, in particular the Licensee is to ensure that the Products comply in all respects with the provisions of the relevant Toy Safety Regulations (where applicable) and all other relevant statutes, regulations and codes of practice in respect of safety and quality.

5.2 The Licensee shall submit for the Licensor's written approval samples of the Products, any articles to be sold with the Products and all packaging material, display, advertising or publicity material and shall refrain from distribution, sales or publication of any of the Products until such approval shall have been first had and obtained. The Licensor reserves the right to require the Licensee to make any alterations that the Licensor may require to such items.

5.2.1 The Licensee shall comply with this Clause 5.2 at each and every stage of development of the Products identified as follows:

PRODUCT                   PACKAGING

Rough visual of concept   Rough visual of concept
Hand/Sample/Prototype     Rough artwork
Pre-production sample     Finished artwork
Production sample         Artwork Proof
                          Finished production packaging

5.2.2 Approval will be granted on design, quality and compliance with the Style Guide and the copyright lines and all designs must be consistent with the identity and image of the property.

5.2.3 Approval is not granted on the basis of any safety or fitness for purpose aspect of the Products as such aspects are the sole responsibility of the Licensee. The Licensee shall produce to the Licensor when requested all relevant safety certificates.

5.3 The Licensee shall ensure that all units of the Products including their wrappings and packaging are of the same description as the sample approved by the Licensor in accordance with Clause 5.2.


5.4 The Licensee shall supply to the Licensor the Number of Samples of the Products free of charge within three months of the first production of the Products.

5.5 If the Licensee employs a third party to manufacture the Products the Licensee shall:

5.5.1 put in place adequate controls to ensure that the manufacturer only manufactures the Product for the Licensee;

5.5.2 ensure that title to any plates or dies manufactured specially for production of the Products are the property of the Licensee and shall be returned to the Licensee by the manufacturer on demand;

5.5.3 only employ manufacturers after a full enquiry has been made to ensure that they are of proper status; and

5.5.4 ensure that any Products manufactured meet the Specifications.

5.6 If the Licensee or its third party manufacturer require imagery or artwork additional to the Style Guide, the Licensee agrees to pay the price quoted from time to time by the Licensor in respect thereof.

6. USE AND PROTECTION OF INTELLECTUAL PROPERTY

6.1 Every unit of the Products and all packaging, advertising and point of sale materials used in connection therewith and which incorporates the Intellectual Property shall bear the following statement which shall not be varied in any way by the Licensee without prior written consent of the Licensor:

"(C) 2002 W&P Shorrocks / Peak Entertainment Ltd" and any other equity partner

6.2 The Licensee shall not use any of the Property as part of the Licensee's name or the name of any entity associated with it without the prior written consent of the Licensor.

6.3 The Licensee shall not during the subsistence of this Agreement or at any time thereafter register or use any of the Intellectual Property in its own name as proprietor.

6.4 The Licensee recognises the Licensor's title to the Intellectual Property and shall not claim any right title or interest in the Intellectual Property or any part of it save as is granted by this Agreement. Any Intellectual Property right that the Licensee shall acquire to the Products is hereby


assigned to the Licensor and, if appropriate, the Licensee shall enter into a legal assignment of such Intellectual Property without payment.

6.5 The Licensee recognises that the copyright lines in any literary, artistic, musical or dramatic work generated or arising from the activities of the Licensee under this Agreement shall be the property of the Licensor and the Licensee with full title guarantee hereby assigns such copyright and all rights related thereto to the Licensor. If the Licensee requires or employs a third party to create any work in connection with this Agreement in respect of which copyright exists, the Licensee shall, prior to the third party creating the said work, obtain an assignment of such copyright and related rights in favour of the Licensor and the Licensee shall do all things necessary to ensure that the said copyright shall vest in the Licensor.

6.6 The Licensee shall promptly call to the attention of the Licensor the use of any part of the Property by any third party or any activity of any third party which might be in the opinion of the Licensee amount to infringement or passing off.

6.7 The Licensee shall not assign the benefit of this Agreement or grant any sub-licence without prior written consent of the Licensor.

6.8 The Licensee shall hold all goodwill generated by its operations under this Agreement as trustee for the benefit of the Licensor.

6.9 Any designs or other works derived by the Licensee from the Intellectual Property or any part of it shall be held by the Licensee on trust for the Licensor and at the Licensor's request shall be assigned to the Licensor without compensation.

6.10 The Licensee shall not, except with the prior written consent of the Licensor, make use of the name of the Licensor in any connection otherwise than is expressly permitted by this Agreement.

6.11 If required by the Licensor, the Licensee will join with the Licensor to become a registered user of the Intellectual Property or any part of it.

7. LICENSEE'S OBLIGATION AS TO MARKETING

7.1 The Licensee shall ensure that the Products shall be on sale to the trade within twelve months, and on sale to the public within fifteen months of the commencement date of the Term.

7.2 It is agreed by the Licensee that the Products will be sold only to recognised wholesale firms for resale to retail firms or to retail firms for resale to the public or direct to the public.


7.3 The Licensee shall ensure so far as it is reasonable practicable that the Products are not supplied for resale as an integral part of any other product and shall not be supplied either directly or indirectly to other manufacturers or to hawkers, peddlers, street vendors and the like or to any person intending to distribute the Products gratuitously.

7.4 The Licensee shall at all times use its best endeavours to promote and sell the Products in the Territory.

7.5 The Licensee shall only market and sell Products in an ethical manner having regard at all times to the image and reputation of the Property and shall therefore use good taste at all times.

7.6 The Licensee shall not harm, misuse or bring into disrepute the Property or the Licensor.

7.7 The Licensee shall distribute and sell the Products only through the Distribution Channels as specified in Clause1 of this Agreement.

8. NO PREMIUMS

8.1 The Licensee shall not sell or otherwise dispose of any of the Products as premiums to any person or persons whatsoever without the consent of the Licensor.

8.2 The right of sale as premiums is expressly reserved by the Licensor and if the Licensee shall receive any approach for the purpose of the use or sale of the products as premiums it shall forthwith notify the Licensor and furnish it with the names and full particulars of the person or persons making the approach.

8.3 For the purposes of this clause "premium" means a product or products combined with a service which is sold or supplied in association with the promotion of another product or service offered in association with the sales promotional activities of retailers wholesalers or manufacturers associations with incentive programmes of all kinds.

9. ACTION AGAINST THIRD PARTIES

9.1 The Licensee shall have the no right to take action against third parties in respect of the Intellectual Property and if required to do so by the Licensor the Licensee shall co-operate fully with the Licensor in any such action the Licensee's expenses incurred in doing so being borne by the Licensor.


9.2 All damages shall be the exclusive property of the Licensor provided that the Licensee shall be entitled to set-off any expenses which is able to claim from the Licensor pursuant to Clause 9.1.

9.3 Any decisions to take action against third parties shall be solely at the discretion of the Licensor.

10. TERMINATION

Without prejudice to any right or remedy the Licensor may have against the Licensee for breach or non-performance of this Agreement, the Licensor shall have the right to immediately terminate this Agreement by serving the Licensee with written notice to that effect in the following circumstances.

10.1 On the Licensee committing a breach of any provision of this Agreement and failing to remedy such breach within 30 days of receiving written notice specifying the breach and requiring remedy thereof;

10.2 if the Licensee shall have any distress or executor levied upon it's goods or effects;

10.3 on the Licensee becoming unable to pay its debts with the meaning of Section 123 Insolvency Act 1986, passing any resolution to wind itself up or on petition being presented to wind up the Licensee or if a Receiver or an Administrative Receiver of the Licensee's undertaking, property or assets or any part thereof is appointed or if an application is made for the appointment of an Administrator of the Licensee, or if the Directors of the Licensee propose a composition of debts or scheme of arrangements.

10.4 on the Licensee for any reason whatever nature being substantially prevented from performing or becoming unable to perform its obligations under this Agreement.

10.5 on the Licensee assigning, sub-contracting or attempting to sub-contract or assign this Agreement without the prior written consent of the Licensor;

10.6 if control of the Licensee shall pass from the present shareholders or owned or controlled by other persons whom the Licensor shall in it's absolute discretion regard as unsuitable;

10.7 if the Licensee ceases or threatens to cease carrying on it's usual business for a period in excess of thirty (30) working days consecutively.

11. TERMINATION CONSEQUENCES


11.1 Upon termination of this Agreement whether by expiry of the Term or otherwise the Licensee shall forthwith discontinue manufacture of the Products.

11.2 If the Licensee shall have any remaining stocks of the Products at the time of termination they may be disposed of by the Licensee in compliance with the terms of this Agreement for three months after termination but not otherwise.

11.3 Any Products in the course of manufacture at the time of termination may be completed within 14 days and disposed of in compliance with Clause 11.2 of this Agreement but not otherwise.

11.4 The Licensee shall forthwith upon termination pay to the Licensor the Guaranteed Royalty to the extent not paid earlier through any combination of the Advance or royalties earned prior to termination.

12. LICENSORS WARRANTY

Licensor represents and warrants to the Licensee that:

12.1 It has and will have throughout the Term of this Agreement, the right to exploit the Property in all media throughout the Territory.

12.2 The rights granted herein do not, so far as the Licensor is aware, violate or infringe any agreements, rights or obligations existing, or to be created during the Term, of any person, firm or corporation.

13. INDEMNITY

13.1 The Licensee shall indemnify and hold harmless the Licensor from and against any liability, loss, claim or proceedings whatsoever arising under any statute or at Common Law in respect of personal injury to or the death of any person and any injury or damage to any property real or personal arising from the sale of the Products unless such liability arises from the neglect or default of the Licensor.

13.2 The Licensee shall have in force Public and Product Liability Insurance for not less than the equivalent of 1 million satisfactory to the Licensor and with the Licensor as additional named insured.

13.3 The policies of insurance shall be shown to the Licensor whenever it requests together with satisfactory evidence of payment of premiums.

14. INSPECTION


The Licensee shall permit the Licensor at all reasonable times to inspect the Licensee's premises in order to satisfy itself that the Licensee is complying with its obligations under this Agreement.

15. MISCELLANEOUS

15.1 No Waiver

No waiver by the Licensor of any of the Licensee's obligations under this Agreement shall be deemed effective unless made by the Licensor in writing nor shall any waiver by the Licensor in respect of any breach be deemed to constitute waiver of or consent to any subsequent breach by the Licensee of it's obligations.

15.2 Severance

In the event that any provision of this Agreement is declared by any judicial proceedings or other competent authority to be void, voidable or illegal the remaining provisions shall continue to apply unless the Licensor at the Licensor's discretion decides that the effect is to defeat the original intentions of the Parties in which case it shall be entitled to terminate the Agreement by 30 days notice in which event the provisions of Clause 11 shall apply.

15.3 No Agency or Partnership

The Parties are not partners nor joint venturers nor is the Licensee entitled to act as the Licensor's agent nor shall the Licensor be liable in respect of any representation act or omission of the Licensee whatever nature.

15.4 Notices

Any Notice to be served on either of the Parties by the other shall be sent by pre-paid recorded delivery or registered post or by facsimile to the address stated in Clause 1 and shall be deemed to have been received by the addressee with (three) 3 working days after posting or 24 hours of transmission if sent by facsimile.

15.5 Choice of Law

This Agreement shall be governed by English law in every particular including formation and interpretation and shall subject to the jurisdiction of the English Courts.

16. TRANSMISSION OF BENEFIT

16.1 This Agreement shall be binding upon and inure to the benefit of the Licensor and its successors and assigns.


16.2 The Licensee may not assign or sub-licence the rights contained in this Agreement.

17. INTEREST

If any sums due hereunder remain unpaid for a period in excess of 14 days after they have become due to the Licensor the unpaid balance will accrue interest at the rate of 4% per annum above the base rate for the time being of Lloyds TSB Bank Plc.

18. FORCE MAJEURE

If the performance of this Agreement is prevented, restricted or interfered with by reason of circumstances beyond the reasonable control of the party obliged to perform it the party so affected upon giving proper notice to the other party shall be excused from performance to the extent of prevention, restriction or interference but the party so affected shall use its best efforts to avoid or remove such causes of non-performance and shall continue performance under the Agreement with the utmost despatch whenever such causes are removed or diminished.

19. HEADINGS

The headings of conditions are for convenience of reference only and shall not affect their interpretation.

20. ENTIRE UNDERSTANDING AND VARIATION

20.1 This Agreement embodies the entire understanding of the parties in respect of the matters contained or referred to in it and there are no promises, conditions or obligations oral or written, expressed or implied other than those contained in this Agreement.

20.2 No variation or amendment of this Agreement or oral promise or commitment related to it shall be valid unless committed to writing and signed by a director of the Owner.

21. THE CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

This Agreement does not create any right enforceable by any person nor a party to it provided that a person who is the permitted assignee or a successor to the Licensor is deemed to be a party to this Agreement.


THE FIRST SCHEDULE

SPECIFICATIONS

The Product shall be manufactured to a standard no lower than the sample provided by the Licensee to the Licensor in accordance with Clause 5.2.

The material used in the manufacturing the Product shall be of no lower quality than that used in the sample.

The colour and depiction of the material shall be as specified in the Style Guide.


SIGNED BY /s/ Alan Shorrocks                            16/02/05

FOR AND ON BEHALF OF THE LICENSOR




SIGNED BY /s/

FOR AND ON BEHALF OF THE LICENSEE


EXHIBIT 10.2

                               LICENSE AGREEMENT:
                         MTM001 (Issued 20th April 2005)

                                SUMMARY OF TERMS
The Licensee:                     Name:  Character Options Ltd
                               Address:  86-88 Coombe Road,
                                         New Malden,
                                         Surrey,
                                         KT3 4QS


                               Contact:  Jon Diver
                                   Tel:  0
                                   Fax:  0
                                e-mail:  jondiver@aol.com

The Property:               Muffin the Mule

The Principal:              Maverick Entertainment Plc

The Licensor:               Peak Entertainment Ltd

The Products:               To be defined

Channels                    of Distribution: Mass market (including,
                            but not limited to, hypermarkets, cash and
                            carry, toy specialty stores, department
                            stores, stationery, gift stores, specialty
                            chain retailers, supermarkets, the
                            internet), Catalogue/ Direct Mail house,
                            Duty Free.

The Territory:              United Kingdom, Channel Islands and Eire.

The Term:                   3 years from signature of contract.

Advance Royalty:            (pound)40,000 + vat.

Guaranteed Royalty:         (pound)100,000

Royalty Rate:               10 % of net selling price
Special Terms:              All above subject to  successful  TV placement  and ongoing  transmission
                            for duration of contract.  The  licensee  agrees to TV advertise  the toy
                            line and market the license comprehensively for the period of the term

Number of Samples:          20 of each product.

This LICENCE AGREEMENT is made this day 20th of April 2005, between:

THE PARTIES:


1. PEAK ENTERTAINMENT LTD whose registered office is at Bagshaw Hall, Bagshaw Hill, Bakewell, Derbyshire, DE45 1DL. ("the Licensor")

2. THE LICENSEE: whose full name and trading or registered address is referred to on the Summary of Terms Sheet ("the Licensee")

RECITALS

(A) The Licensor controls all rights of exploitation in the Property.

(B) The Licensee wished to obtain a license to manufacture, market, sell and distribute the Products incorporating the Property and the Licensor has agreed to grant such right.

1. DEFINITIONS

"The Intellectual Property" - means copyright, trademark and other rights in the Property.

"Notice" - means notice in writing served in accordance with the provisions of sub-clause 15.4.

"The Royalties" - means the payments to be made to the Licensor by the Licensee under Clause 4.

"The Specifications" - means the specifications set out in the first schedule.

"The Style Guide" - means the documents provided by the Licensor to the Licensee from time to time giving details of the Property including the papers that have been given to the Licensee before the signing of this Agreement.

"Channels of Distribution" - means all channels as described in the summary

The words referred to in the first column of the Summary of Terms shall have the meanings attributed to them in the second column of the Summary of Terms Sheet.

2. GRANT

2.1 In consideration of the obligations undertaken by the Licensee under this Agreement the Licensor grants to the Licensee an exclusive license to apply the Property to the manufacture, marketing, distribution and sale of the Products in the Territory in accordance with the Specifications and the Style Guide and under the terms of this Agreement in the Territory.

2.2 The Licensee shall only market and solicit orders for the Products in the Territory. If it receives orders for the supply of Products outside the Territory it will immediately inform the Licensor thereof.


2.3 The Licensor reserves the right to remove any of the Products listed in the Summary of Terms where they are not on sale to the trade in accordance with Clause 7.1 in any part of the Territory.

2.4 The Licensor reserves all rights not specifically granted herein including the right to grant licenses of the Property to other licensees in the Territory in respect of other product categories.

2.5 The Licensor also reserves the right to request any third party to manufacture the Products for promotional purposes.

3. TERM

This Agreement shall be for the Term unless terminated earlier in accordance with Clause 10 herein.

4. ROYALTIES

4.1 In consideration of the rights granted by the Licensor the Licensee shall pay to the Licensor a royalty of the Agreed Percentage of the Net Selling Price of each unit of the Products sold by the Licensee (less only normal trade discounts). Upon the signing of this Agreement the Licensee shall pay to the Licensor the Advance Royalty which shall not in any circumstances be repayable either in whole or in part but which shall be set off against royalty payments payable during the Term of this Agreement. All payments made by the Licensee to the Licensor pursuant to this Agreement shall be made by telegraphic transfer to the following account:

Account:          Peak Entertainment Ltd
Bank:             Lloyds TSB Bank Plc
Account No:       2560768
Sort Code:        30-00-09

4.2 The Licensee shall within 30 days of the 30th March, 30th June, 30th September and 30th December in each year deliver to the Licensor a statement giving particulars of all sales of the Products effected by the Licensee since the last statement date (and in respect of the first statement; since the date of this Agreement) and showing the total royalty payable to the Licensor and at the same time deliver to the Licensor a remittance if due.

4.3 If the Licensee's sales of the Product during the term or before the termination date (Clause 10) if sooner are insufficient to generate royalties equal to the Guaranteed Royalty at the end of the Term, or termination date (Clause 10), whichever the sooner, the Licensee shall pay to the Licensor the difference between royalties generated throughout the Term or before the termination date (Clause 10) if sooner and the Guaranteed Royalty.

4.4 The Licensee shall keep and maintain separate and detailed accurate accounts and records so as to show the quantity and Net Selling Price of Products sold, used or otherwise disposed of by the Licensee for each royalty period giving


separately the figures for each product. The Licensor shall have the right at reasonable hours, and on giving the Licensee reasonable notice, to appoint a representative (being a qualified, certified or chartered accountant) to audit the said accounts and records and if such audit reveals a discrepancy it shall be collected forthwith. It is further agreed that if such discrepancy is 5% or more in the Licensee's favour, the Licensee shall within 30 days of the date of the relevant invoice pay the Licensor's reasonable auditing fees and expenses in addition to any other payments due and interest on the discrepancy at 4% above the base lending rate from time to time of Lloyds TSB Bank Plc.

4.5 All sums payable by the Licensee to any person pursuant to this Agreement shall be paid free and clear of all deductions (except normal trade discounts) or withholdings whatsoever save only as may be required by any applicable law.

5. SPECIFICATION AND QUALITY

5.1 The Licensee shall manufacture the Products according to the Specifications and the Style Guide or such other specifications as the Licensor may from time to time substitute and at all times ensure that the Products are of the highest quality attainable within the Specifications, in particular the Licensee is to ensure that the Products comply in all respects with the provisions of the relevant Toy Safety Regulations (where applicable) and all other relevant statutes, regulations and codes of practice in respect of safety and quality.

5.2 The Licensee shall submit for the Licensor's written approval samples of the Products, any articles to be sold with the Products and all packaging material, display, advertising or publicity material and shall refrain from distribution, sales or publication of any of the Products until such approval shall have been first had and obtained. The Licensor reserves the right to require the Licensee to make any alterations that the Licensor may require to such items.

5.2.1 The Licensee shall comply with this Clause 5.2 at each and every stage of development of the Products identified as follows as applicable:

PRODUCT                   PACKAGING

Rough visual of concept   Rough visual of concept
Hand/Sample/Prototype     Rough artwork
Pre-production sample     Finished artwork
Production sample         Artwork Proof
                          Finished production packaging

5.2.2 Approval will be granted on design, quality and compliance with the Style Guide and the copyright lines and all designs must be consistent with the identity and image of the property.

5.2.3 Approval is not granted on the basis of any safety or fitness for purpose aspect of the Products, as such aspects are the sole responsibility of the


Licensee. The Licensee shall produce to the Licensor when requested all relevant safety certificates.

5.3 The Licensee shall ensure that all units of the Products including their wrappings and packaging are of the same description as the sample approved by the Licensor in accordance with Clause 5.2.

5.4 The Licensee shall ensure that all covermounts related to the Products are approved by the Licensor in accordance with Clause 5.2.

5.5 The Licensee shall supply to the Licensor the Number of Samples of the Products free of charge within three months of the first production of the Products.

5.6 If the Licensee employs a third party to manufacture the Products the Licensee shall:

5.6.1 put in place adequate controls to ensure that the manufacturer only manufactures the Product for the Licensee;

5.6.2 ensure that title to any plates or dies manufactured specially for production of the Products are the property of the Licensee and shall be returned to the Licensee by the manufacturer on demand;

5.6.3 only employ manufacturers after a full enquiry has been made to ensure that they are of proper status; and

5.6.4 ensure that any Products manufactured meet the Specifications.

5.7 If the Licensee or its third party manufacturer requires imagery or artwork additional to the Style Guide, the Licensee agrees to pay the price quoted from time to time by the Licensor in respect thereof.

6. USE AND PROTECTION OF INTELLECTUAL PROPERTY

6.1 Every unit of the Products and all packaging, advertising and point of sale materials used in connection therewith and which incorporates the Intellectual Property shall bear the following statement which shall not be varied in any way by the Licensee without prior written consent of the Licensor:

"Licensed by Peak Licensing (C) 2005 Maverick Entertainment Ltd and SMPL."

6.2 The Licensee shall not use any of the Property as part of the Licensee's name or the name of any entity associated with it without the prior written consent of the Licensor.

6.3 The Licensee shall not during the subsistence of this Agreement or at any time thereafter register or use any of the Intellectual Property in its own name as proprietor.


6.4 The Licensee recognises the Licensor's title to the Intellectual Property and shall not claim any right title or interest in the Intellectual Property or any part of it save as is granted by this Agreement. Any Intellectual Property right that the Licensee shall acquire to the Products is hereby assigned to the Licensor and, if appropriate, the Licensee shall enter into a legal assignment of such Intellectual Property without payment.

6.5 The Licensee recognises that the copyright lines in any literary, artistic, musical or dramatic work generated or arising from the activities of the Licensee under this Agreement shall be the property of the Licensor and the Licensee with full title guarantee hereby assigns such copyright and all rights related thereto to the Licensor. If the Licensee requires or employs a third party to create any work in connection with this Agreement in respect of which copyright exists, the Licensee shall, prior to the third party creating the said work, obtain an assignment of such copyright and related rights in favour of the Licensor and the Licensee shall do all things necessary to ensure that the said copyright shall vest in the Licensor.

6.6 The Licensee shall promptly call to the attention of the Licensor the use of any part of the Property by any third party or any activity of any third party, which might be in the opinion of the Licensee amount to infringement or passing off.

6.7 The Licensee shall not assign the benefit of this Agreement or grant any sub-license without prior written consent of the Licensor.

6.8 The Licensee shall hold all goodwill generated by its operations under this Agreement as trustee for the benefit of the Licensor.

6.9 Any designs or other works derived by the Licensee from the Intellectual Property or any part of it shall be held by the Licensee on trust for the Licensor and at the Licensor's request shall be assigned to the Licensor without compensation.

6.10 The Licensee shall not, except with the prior written consent of the Licensor, make use of the name of the Licensor in any connection otherwise than is expressly permitted by this Agreement.

6.11 If required by the Licensor, the Licensee will join with the Licensor to become a registered user of the Intellectual Property or any part of it.

7. LICENSEE'S OBLIGATION AS TO MARKETING

7.1 The Licensee shall ensure that the Products shall be on sale to the trade within six months, and on sale to the public within twelve months of the commencement date of the Term.

7.2

7.3 The Licensee shall ensure so far as it is reasonable practicable that the Products are not supplied for resale as an integral part of any other product and


shall not be supplied either directly or indirectly to other manufacturers or to hawkers, peddlers, street vendors and the like or to any person intending to distribute the Products gratuitously, unless agreed in writing with the Licensor.

7.4 The Licensee shall at all times use its best commercial endeavors to promote and sell the Products in the Territory.

7.5 The Licensee shall only market and sell Products in an ethical manner having regard at all times to the image and reputation of the Property and shall therefore use good taste at all times.

7.6 The Licensee shall not harm, misuse or bring into disrepute the Property or the Licensor.

7.7 The Licensee shall distribute and sell the Products only through the Distribution Channels as specified in Clause1 of this Agreement.

8. NO PREMIUMS

8.1 The Licensee shall not sell or otherwise dispose of any of the Products as premiums to any person or persons whatsoever without the consent of the Licensor.

8.2 The right of sale as premiums is expressly reserved by the Licensor and if the Licensee shall receive any approach for the purpose of the use or sale of the products as premiums it shall forthwith notify the Licensor and furnish it with the names and full particulars of the person or persons making the approach.

8.3 For the purposes of this clause "premium" means a product or products combined with a service which is sold or supplied in association with the promotion of another product or service offered in association with the sales promotional activities of retailers wholesalers or manufacturers associations with incentive programmes of all kinds.

9. ACTION AGAINST THIRD PARTIES

9.1 The Licensee shall have the no right to take action against third parties in respect of the Intellectual Property and if required to do so by the Licensor the Licensee shall co-operate fully with the Licensor in any such action the Licensee's expenses incurred in doing so being borne by the Licensor.

9.2 All damages shall be the exclusive property of the Licensor provided that the Licensee shall be entitled to set-off any expenses which is able to claim from the Licensor pursuant to Clause 9.1.

9.3 Any decisions to take action against third parties shall be solely at the discretion of the Licensor.

10. TERMINATION


Without prejudice to any right or remedy the Licensor may have against the Licensee for breach or non-performance of this Agreement, the Licensor shall have the right to immediately terminate this Agreement by serving the Licensee with written notice to that effect in the following circumstances.

10.1 On the Licensee committing a breach of any provision of this Agreement and failing to remedy such breach within 30 days of receiving written notice specifying the breach and requiring remedy thereof;

10.2 if the Licensee shall have any distress or executor levied upon it's goods or effects;

10.3 on the Licensee becoming unable to pay its debts with the meaning of Section 123 Insolvency Act 1986, passing any resolution to wind itself up or on petition being presented to wind up the Licensee or if a Receiver or an Administrative Receiver of the Licensee's undertaking, property or assets or any part thereof is appointed or if an application is made for the appointment of an Administrator of the Licensee, or if the Directors of the Licensee propose a composition of debts or scheme of arrangements.

10.4 on the Licensee for any reason whatever nature being substantially prevented from performing or becoming unable to perform its obligations under this Agreement.

10.5 on the Licensee assigning, sub-contracting or attempting to sub-contract or assign this Agreement without the prior written consent of the Licensor;

10.6 if control of the Licensee shall pass from the present shareholders or owned or controlled by other persons whom the Licensor shall in it's absolute discretion regard as unsuitable;

10.7 if the Licensee ceases or threatens to cease carrying on it's usual business for a period in excess of thirty (30) working days consecutively.

11. TERMINATION CONSEQUENCES

11.1 Upon termination of this Agreement whether by expiry of the Term or otherwise the Licensee shall forthwith discontinue manufacture of the Products.

11.2 If the Licensee shall have any remaining stocks of the Products at the time of termination they may be disposed of by the Licensee in compliance with the terms of this Agreement for 180 days after termination but not otherwise.

11.3 Any Products in the course of manufacture at the time of termination may be completed within 14 days and disposed of in compliance with Clause 11.2 of this Agreement but not otherwise.


11.4 The Licensee shall forthwith upon termination pay to the Licensor the Guaranteed Royalty to the extent not paid earlier through any combination of the Advance or royalties earned prior to termination.

12. LICENSORS WARRANTY

Licensor represents and warrants to the Licensee that:

12.1 It has and will have throughout the Term of this Agreement, the right to exploit the Property in all media throughout the Territory.

12.2 The rights granted herein do not, so far as the Licensor is aware, violate or infringe any agreements, rights or obligations existing, or to be created during the Term, of any person, firm or corporation.

13. INDEMNITY

13.1 The Licensee shall indemnify and hold harmless the Licensor from and against any liability, loss, claim or proceedings whatsoever arising under any statute or at Common Law in respect of personal injury to or the death of any person and any injury or damage to any property real or personal arising from the sale of the Products unless such liability arises from the neglect or default of the Licensor.

13.2 The Licensee shall have in force Public and Product Liability Insurance for not less than the equivalent of 1 million satisfactory to the Licensor and with the Licensor as additional named insured.

13.3 The policies of insurance shall be shown to the Licensor whenever it requests together with satisfactory evidence of payment of premiums.

14. INSPECTION

The Licensee shall permit the Licensor at all reasonable times to inspect the Licensee's premises in order to satisfy itself that the Licensee is complying with its obligations under this Agreement.

15. MISCELLANEOUS

15.1 No Waiver

No waiver by the Licensor of any of the Licensee's obligations under this Agreement shall be deemed effective unless made by the Licensor in writing nor shall any waiver by the Licensor in respect of any breach be deemed to constitute waiver of or consent to any subsequent breach by the Licensee of it's obligations.

15.2 Severance


In the event that any provision of this Agreement is declared by any judicial proceedings or other competent authority to be void, voidable or illegal the remaining provisions shall continue to apply unless the Licensor at the Licensor's discretion decides that the effect is to defeat the original intentions of the Parties in which case it shall be entitled to terminate the Agreement by 30 days notice in which event the provisions of Clause 11 shall apply.

15.3 No Agency or Partnership

The Parties are not partners nor joint ventures nor is the Licensee entitled to act as the Licensor's agent nor shall the Licensor be liable in respect of any representation act or omission of the Licensee whatever nature.

15.4 Notices

Any Notice to be served on either of the Parties by the other shall be sent by pre-paid recorded delivery or registered post or by facsimile to the address stated in Clause 1 and shall be deemed to have been received by the addressee with (three) 3 working days after posting or 24 hours of transmission if sent by facsimile.

15.5 Choice of Law

This Agreement shall be governed by English law in every particular including formation and interpretation and shall subject to the jurisdiction of the English Courts.

16. TRANSMISSION OF BENEFIT

16.1 This Agreement shall be binding upon and inure to the benefit of the Licensor and its successors and assigns.

16.2 The Licensee may not assign or sub-license the rights contained in this Agreement.

The Licensee may not assign or sub-license the rights contained in this Agreement without the prior written pproval of the Licensor (which shall not be unreasonably withheld).

17. INTEREST

If any sums due hereunder remain unpaid for a period in excess of 30 days after they have become due to the Licensor the unpaid balance will accrue interest at the rate of 4% per annum above the base rate for the time being of Lloyds TSB Bank Plc.

18. FORCE MAJEURE

If the performance of this Agreement is prevented, restricted or interfered with by reason of circumstances beyond the reasonable control of the party obliged to perform it the party so affected upon giving proper notice to the other party shall be excused from performance to the extent of prevention, restriction or interference but the party so affected shall use its best efforts to avoid or remove such causes of non-performance and shall continue performance under the Agreement with the utmost despatch whenever such causes are removed or diminished.


19. HEADINGS

The headings of conditions are for convenience of reference only and shall not affect their interpretation.

20. THE CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

This Agreement does not create any right enforceable by any person nor a party to it provided that a person who is the permitted assignee or a successor to the Licensor is deemed to be a party to this Agreement.

SIGNED BY /s/

FOR AND ON BEHALF OF THE LICENSOR

DATE 20/4/05

SIGNED BY /s/

FOR AND ON BEHALF OF THE LICENSEE

DATE 20/4/2005

THE FIRST SCHEDULE

SPECIFICATIONS

The Product shall be manufactured to a standard no lower than the sample provided by the Licensee to the Licensor in accordance with Clause 5.2.

The material used in the manufacturing the Product shall be of no lower quality than that used in the sample.

The colour and depiction of the material shall be as specified in conjunction with the licensors design studio.


EXHIBIT 10.3

                         LICENCE AGREEMENT NUMBER MTM002

                                SUMMARY OF TERMS
The Licensee:                      Name:  Future Publishing  Ltd
                                Address:  Beauford Court
                                          30 Monmouth Street
                                          Bath BA1 2BW
                                Contact:  Kerry Lawrence / Mike Goldsmith
                                    tel:  01225 442244
                                    fax:  01225 732398
                                 e-mail:  kerry.lawrence@futurenet.co.uk
                                          mike.goldsmith@futurenet.co.uk

The Property:                Muffin The Mule

The Licensor:                Peak Entertainment Ltd

The Product:                 Magazine with covermount to be published every 21 days

Issue:                       an issue of the Product,  to be  published  once every 21 days during the
                             Term

Channels of Distribution:    All

The Territory:               United Kingdom & Eire,  Northern  Ireland,  Channel Islands,  the Isle of
                             Man and any other  territories  agreed  between the Parties  from time to
                             time.

The Term:                    2 years from first publication date

Advance Royalty:             (pound)5,000 + Vat on signature

Guaranteed Royalty:          (pound)22,500  + Vat  (includes  the above  Advance  Royalty)  payable  in five
                             instalments on the dates set out below:

                             1st Instalment of (pound)3,500: due on no
                             earlier than the date of publication of
                             Issue 7 and four further instalments of
                             (pound)3,500 each due quarterly thereafter.


Royalty Rate:                6% of cover  price  less VAT of  copies  sold on the  news-stand  and not
                             returned,  provided  that no  Royalties  shall be due in  relation to the
                             first six Issues.

Number of Samples:           12 of each Product MUST BE SUPPLIED


This LICENCE AGREEMENT is made this ______ day of July 2005 between:

THE PARTIES:

1. PEAK ENTERTAINMENT LTD (company number: 04325429) whose registered office is at Bagshaw Hall, Bagshaw Hill, Bakewell, Derbyshire, DE45 1DL ("the Licensor")

2. FUTURE PUBLISHING LIMITED (company number: 02008885) whose registered office is at Beauford Court, 30 Monmouth Street, Bath BA1 2BW ("the Licensee")

RECITALS

(A) The Licensor controls all rights of exploitation in the Property.

(B) The Licensee wished to obtain a licence to manufacture, market, sell and distribute the Product incorporating the Property and the Licensor has agreed to grant such right.

1. DEFINITIONS

"Intellectual Property" - means copyright, trade mark and other intellectual property rights in the Property.

"Cover Price" - means the recommended resale price of the Product in the Territory.

"Notice" - means notice in writing served in accordance with the provisions of sub-clause 14.4.

"The Royalties" - means the payments to be made to the Licensor by the Licensee under Clause 4.

"The Specifications" - means the specifications set out in the first schedule.

"The Style Guide" - means the documents provided by the Licensor to the Licensee from time to time giving details of the Property including the papers that have been given to the Licensee before the signing of this Agreement.

"Channels of Distribution" - means all channels of distribution specified in the Summary of Terms.

The words referred to in the first column of the Summary of Terms shall have the same meaning in this Agreement as the meanings attributed to them in the second column of the Summary of Terms.

2. GRANT


2.1 In consideration of the obligations undertaken by the Licensee under this Agreement the Licensor grants to the Licensee an exclusive licence to apply the Property to the manufacture, marketing, distribution and sale of the Product in the Territory in accordance with the Specifications and the Style Guide and under the terms of this Agreement in the Territory.

2.2 The Licensee shall only market and solicit orders for the Product in the Territory. If it receives orders for the supply of Product outside the Territory it will inform the Licensor thereof as soon as reasonably possible thereafter.

2.3 The Licensor reserves the right to withdraw the Licensee's right to manufacture, market, distribute and sell the Product where it is not on sale to the trade in accordance with Clause 7.1 in the Territory.

2.4 The Licensor reserves all rights not specifically granted herein including the right to grant licences of the Property to other licensees in the Territory in respect of other product categories except magazines and periodicals.

2.5 The Licensor also reserves the right to request that the Licensee procures the manufacture of such number of copies of an Issue that the Licensor reasonably requires for promotional purposes, provided that the Licensor reimburses all costs incurred by the Licensee in relation to the same.

3. TERM

This Agreement shall be for the Term unless terminated earlier in accordance with Clause 9 herein.

4. ROYALTIES

4.1 In consideration of the rights granted by the Licensor the Licensee shall pay to the Licensor the Royalties at the Royalty Rate on each unit of an Issue which is sold by the Licensee on the news-stand and not returned, provided that no Royalties shall be due in relation to the first six Issues which are published by the Licensee following the date of this Agreement (but Licensee shall still be required to notify Licensor of the sales of those first six Issues in accordance with clause 4.2).

4.2 The Licensee shall within 30 days of the 30th March, 30th June, 30th September and 30th December in each year during the Term deliver to the Licensor a statement giving particulars of all sales of the Product effected by the Licensee on the news-stand (which are not returned) since the last statement date (and in respect of the first statement, since the date of this Agreement) and subject to clause 4.1, showing the total Royalties payable to the Licensor in relation to the same and at the same time the Licensee shall subject to clause 4.1 deliver to the Licensor a remittance for the greater of the full amount of those Royalties or the instalment of the Guaranteed Royalty applicable to that quarter (if relevant) less only the pro rata Advance applicable for the relevant quarter (if any). The form of the statement is set out in the second Schedule.


4.3 The Licensee shall keep and maintain separate and detailed accurate accounts and records so as to show the quantity and Cover Price of Product sold on the news-stand by the Licensee (and not returned) for each royalty period giving separately the figures for each Issue of the Product. The Licensor shall have the right, no more than once every twelve months, at reasonable hours and on giving the Licensee reasonable notice, to appoint a representative (being a qualified, certified or chartered accountant) to audit the said accounts and records and if such audit reveals a discrepancy it shall be collected forthwith. It is further agreed that if such discrepancy is 5% or more in the Licensee's favour, the Licensee shall within 14 days of the date of the relevant invoice pay the Licensor's reasonable auditing fees and expenses in addition to any other payments due and interest on the discrepancy at 2% above the base lending rate from time to time of National Westminster Bank Plc.

4.4 All sums payable by the Licensee to the Licensor pursuant to this Agreement shall be paid free and clear of all deductions (except normal trade discounts) or withholdings whatsoever, save only as may be required by any applicable law.

5. SPECIFICATION AND QUALITY

5.1 The Licensee shall manufacture the Product according to the Specifications and the Style Guide or such other specifications as the Licensor may from time to time reasonably require and at all times ensure that the Product is of a high quality. In particular the Licensee is to ensure that the Product complies in all material respects with all relevant statutes, regulations and codes of practice in the Territory in respect of safety and quality.

5.2 Subject to Clause 5.2.3 the Licensee shall submit for the Licensor's written approval on the basis set out below a sample of each Issue, including any articles to be sold with that Issue and all packaging material, display, advertising or publicity material associated with that Issue ("Associated Materials") and shall refrain from distribution, sale or publication of such Issue (and Associated Materials) until such approval shall have been first had and obtained from the Licensor, provided that the Licensor notifies the Licensee of its approval or otherwise of an Issue and Associated Materials within 5 working days of receipt of the same from the Licensee and if the Licensor fails to notify the Licensee within that time, such Issue and Associated Material shall be deemed approved. The Licensor reserves the right to require the Licensee to make any reasonable alterations that the Licensor may require to such Issue and Associated Materials.

5.2.1    Approval will be granted provided that the Issue and
         Associated Material complies in all material respects with the
         Style Guide and the Specifications and provided that all
         written material and designs are reasonably consistent with
         the identity and image of the Property.

5.2.2    Approval is not granted on the basis of any safety or fitness
         for purpose aspect of the Product as such aspects are the sole
         responsibility of the Licensee. The Licensee shall produce to
         the Licensor when reasonably requested all relevant safety
         certificates (if any).

5.2.3    The Licensee may from time to time seek approval of concepts
         to be used in an Issue and/or Associated Material. If Licensor
         approves of a concept, the Licensee shall be entitled to use
         the same in substantially the same form as that in which it
         was approved by the Licensee in future Issues and/or
         Associated Material without seeking prior approval from
         Licensor.

5.3 The Licensee shall ensure that all units of an Issue and Associated Material are of the same description as the sample approved by the Licensor in accordance with Clause 5.2.

5.4 The Licensee shall supply to the Licensor the Number of Samples of each Issue free of charge within three months of the on sale date of such Issue of the Products.

5.5 If the Licensee employs a third party to manufacture the Products the Licensee shall:

5.5.1    put in place adequate controls to ensure that the manufacturer
         only manufactures the Product for the Licensee;

5.5.2    use reasonable endeavours to ensure that title to any plates
         or dies manufactured specially for production of the Product
         is the property of the Licensee and shall be returned to the
         Licensee by the manufacturer on demand;

5.5.3    only employ manufacturers after an enquiry has been made into
         their status; and

5.5.4    ensure that any Product manufactured meets the Specifications.

5.6 If the Licensee or its third party manufacturer require imagery or artwork additional to the Style Guide, the Licensee agrees to pay the price quoted from time to time by the Licensor in respect thereof.

6. USE AND PROTECTION OF INTELLECTUAL PROPERTY

6.1 Every Issue and all packaging, advertising and point of sale materials used in connection therewith and which incorporates the Intellectual Property shall bear the following statement which shall not be varied in any way by the Licensee without prior written consent of the Licensor:

"(C) 2005 Maverick Entertainment and SMPL . Published by Future Publishing Limited under licence from Peak Entertainment Ltd."

6.2 The Licensee shall not use any of the Property as part of the Licensee's name or the name of any entity associated with it without the prior written consent of the Licensor.


6.3      The Licensee shall not during the subsistence of this Agreement or
         at any time thereafter register or use any of the Intellectual
         Property in its own name as proprietor.

6.4      The Licensee recognises the Licensor's title to the Intellectual
         Property and shall not claim any right title or interest in such
         Intellectual Property or any part of it save as is granted by this
         Agreement. Any intellectual property right that the Licensee shall
         acquire to the Property is hereby assigned to the Licensor and, if
         appropriate, the Licensee shall enter into a legal assignment of such
         Intellectual Property at the Licensor's cost.

6.5      The Licensee recognizes that the copyright in any literary, artistic,
         musical or dramatic work generated or arising from the activities of
         the Licensee under this Agreement to the extent it relates directly to
         the Property, shall be the property of the Licensor and the Licensee
         with full title guarantee hereby assigns such copyright and all rights
         related thereto to the Licensor. If the Licensee requires or employs a
         third party to create any work in connection with this Agreement in
         respect of which copyright exists, the Licensee shall, prior to the
         third party creating the said work, obtain an assignment of such
         copyright and related rights in favour of the Licensee (to the extent
         it relates directly to the Property) and the Licensee shall do all
         things reasonably necessary to ensure that the said copyright shall
         vest in the Licensor.

6.6      The Licensee shall promptly call to the attention of the Licensor the
         use of any part of the Property by any third party or any activity of
         any third party which might be in the opinion of the Licensee amount to
         infringement or passing off.

6.7      The Licensee shall not assign the benefit of this Agreement or grant
         any sub-licence without prior written consent of the Licensor, save
         that the Licensee shall be entitled to assign, novate or otherwise
         transfer its rights and obligations under this Agreement in whole or
         part to any of its group companies.

6.8      The Licensee shall hold all goodwill generated by its operations under
         this Agreement, to the extent it relates directly to the Property, as
         trustee for the benefit of the Licensor.

6.9      Any designs or other works derived by the Licensee directly from the
         Intellectual Property or any part of it shall be held by the Licensee
         on trust for the Licensor and at the Licensor's request shall be
         assigned to the Licensor at the Licensor's cost.

6.10     The Licensee shall not, except with the prior written consent of the
         Licensor, make use of the name of the Licensor in any connection
         otherwise than is expressly permitted by this Agreement.

6.11     If reasonably required by the Licensor, the Licensee will (at the
         Licensor's cost) join with the Licensor to become a registered user of
         the Intellectual Property or any part of it.

6.12     The Licensor agrees that during the Term it shall not licence any
         third party publisher to publish in the UK an "Official" magazine
         relating to the Property or a magazine principally about Property
         which is officially endorsed by the Licensor.

7.       LICENSEE'S OBLIGATION AS TO MARKETING

7.1      The Licensee shall, subject to the launch of Muffin the Mule TV Show in
         September 2005, ensure that the first Issue shall be on sale within
         twelve months of the date of this Agreement.

7.2      It is agreed that the Licensee will only sell the Product to its
         appointed distributor, recognised wholesale firms for resale to retail
         firms, retail firms for resale to the public or direct to the public.

7.3      The Licensee shall ensure so far as it is reasonably practicable that
         the Product is not supplied for resale as an integral part of any other
         product and shall not be supplied to hawkers, peddlers, street vendors
         and the like or to any person intending to distribute the Product
         gratuitously.

7.4      The Licensee shall at all times use its reasonable endeavours to
         promote and sell the Product in the Territory.

7.5      The Licensee shall have regard at all times to the image and reputation
         of the Property and shall therefore use good taste at all times.

7.6      The Licensee shall not knowingly harm, misuse or bring into disrepute
         the Property or the Licensor.

7.7      The Licensee shall distribute and sell the Product only through the
         Channels of Distribution.

8.       ACTION AGAINST THIRD PARTIES

8.1      Subject to clause 8.4, the Licensee shall have the no right to take
         action against third parties in respect of the Intellectual Property
         and if required to do so by the Licensor the Licensee shall co-operate
         fully with the Licensor in any such action the Licensee's expenses
         incurred in doing so being borne by the Licensor.

8.2      Subject to clause 8.4, all damages shall be the exclusive property of
         the Licensor provided that the Licensee shall be entitled to set-off
         any expenses which is able to claim from the Licensor pursuant to
         Clause 8.1.

8.3      Subject to clause 8.4, any decisions to take action against third
         parties shall be solely at the discretion of the Licensor.

8.4      The Licensee shall have the right to take action against any third
         party who is infringing: (a) the intellectual property rights in the
         Product (other than the

         Intellectual Property); and (b) the Intellectual Property comprising
         the Product, only if the Licensor fails to do so within a reasonable
         period of receipt of request from the Licensee. The Licensee shall be
         entitled to retain all damages received in respect of such action and
         the Licensor shall provide reasonable assistance to the Licensee (at
         the Licensee's cost) in relation to the same.

9.       TERMINATION

9.1      Without prejudice to any right or remedy each party may have against
         the other for breach or non-performance of this Agreement, each party
         shall have the right to immediately terminate this Agreement by serving
         written notice on the other party to that effect in the following
         circumstances:

         9.1.1    On the other party committing a material breach of any
                  provision of this Agreement and failing to remedy such breach
                  within 30 days of receiving written notice specifying the
                  breach and requiring remedy thereof;

         9.1.2    if the other party shall have any distress or execution levied
                  upon it's goods or effects;

         9.1.3    on the other party becoming unable to pay its debts within the
                  meaning of Section 123 Insolvency Act 1986, passing any
                  resolution to wind itself up or on petition being presented to
                  wind it up or if a Receiver or an Administrative Receiver of
                  the other party's undertaking, property or assets or any part
                  thereof is appointed or if an application is made for the
                  appointment of an administrator of the other party, or if the
                  directors of the other party propose a composition of debts or
                  scheme of arrangements.

         9.1.4    on the other party for any reason whatever nature being
                  substantially prevented from performing or becoming unable to
                  perform its obligations under this Agreement;

         9.1.5    on the other party assigning, sub-contracting or attempting to
                  sub-contract or assign this Agreement otherwise than as
                  permitted herein without the prior written consent of the
                  other;

         9.1.6    if control of the other party shall pass from the present
                  shareholders or shall become owned or controlled by other
                  persons whom the non-defaulting party shall in it's absolute
                  discretion regard as unsuitable;

         9.1.7    if the other party ceases or threatens to cease carrying on
                  it's usual business for a period in excess of thirty (30)
                  working days consecutively.

9.2      The Licensee shall be entitled to cease or suspend publication of the
         Product and/or immediately terminate this Agreement at any time: (a) if
         publication of

         three or more consecutive Issues are unprofitable (loss making) for the
         Licensee; and/or (b) if the four biggest supermarkets from time to time
         do not agree to stock the Product at any time on or after the end of
         the Royalty free period; (c) if the TV rating figures relating to
         Muffin the Mule are less than those agreed from time to time between
         the Parties; and (d) if Licensor fails to market the Property in
         accordance with the requirements set out in the Third Schedule.

10.      TERMINATION CONSEQUENCES

10.1     Subject to clause 10.3, upon termination of this Agreement whether by
         expiry of the Term or otherwise the Licensee shall forthwith
         discontinue manufacture of the Product.

10.2     If the Licensee shall have any remaining stocks of the Product at the
         time of termination they may be disposed of by the Licensee in
         compliance with the terms of this Agreement for three months after
         termination but not otherwise.

10.3     Any Issue in the course of manufacture at the time of termination may
         be completed within 14 days and disposed of in compliance with Clause
         10.2 of this Agreement but not otherwise.

11.      LICENSOR'S WARRANTY

         Licensor represents and warrants to the Licensee that:

11.1     It has and will have throughout the Term of this Agreement, the right
         to exploit the Property in all media throughout the Territory and the
         right to licence the Licensee to exploit the Property in accordance
         with the terms of this Agreement; and

11.2     The rights granted herein do not violate or infringe any agreements,
         rights or obligations existing, or to be created during the Term, of
         any person, firm or corporation.

12.      INDEMNITY

12.1     The Licensee shall indemnify and hold harmless the Licensor from and
         against any liability, loss, claim or proceedings whatsoever arising
         under any statute or at Common Law in respect of personal injury to or
         the death of any person and any injury or damage to any property real
         or personal arising from the sale of the Product unless such liability
         arises from the neglect or default of the Licensor (including any
         breach by the Licensor of clause 11).

12.2     The Licensee shall have in force insurance to cover its potential
         liability under this Agreement for not less than the equivalent of
         (pound)1 million.

12.3     The policies of insurance shall be shown to the Licensor whenever it
         reasonably requests together with satisfactory evidence of payment of
         premiums.

12.4     The Licensor shall indemnify and keep indemnified the Licensee, its
         officers and employees against any and all claims, suits, loss, damage,
         disbursements (including reasonable legal costs) arising out of any use
         by Licensee of the Property in accordance with the terms of this
         Agreement and/or as a result of any breach by Licensor of the terms of
         this Agreement.

13.      INSPECTION

         The Licensee shall permit the Licensor at all reasonable times to
         inspect the Licensee's premises in order to satisfy itself that the
         Licensee is complying with its obligations under this Agreement.

14.      MISCELLANEOUS

14.1     No Waiver

         No waiver by the Licensor of any of the Licensee's obligations under
         this Agreement shall be deemed effective unless made by the Licensor in
         writing nor shall any waiver by the Licensor in respect of any breach
         be deemed to constitute waiver of or consent to any subsequent breach
         by the Licensee of it's obligations.

14.2     Severance

         In the event that any provision of this Agreement is declared by any
         judicial proceedings or other competent authority to be void, voidable
         or illegal the remaining provisions shall continue to apply unless the
         effect is to defeat the original intentions of the Parties in which
         case this Agreement shall automatically terminate and the provisions of
         Clause 10 shall apply.

14.3     No Agency or Partnership

         The Parties are not partners nor joint venturers nor is the Licensee
         entitled to act as the Licensor's agent nor shall the Licensor be
         liable in respect of any representation act or omission of the Licensee
         whatever nature.

14.4     Notices

         Any Notice to be served on either of the Parties by the other shall be
         sent by pre-paid recorded delivery or registered post or by facsimile
         to the address set out below and shall be deemed to have been received
         by the addressee within (three) 3 working days after posting or 24
         hours of transmission if sent by facsimile during working hours.

         Any notices to the Licensee shall be sent:

         for the attention of Kerry Lawrence/Mike Goldsmith

         Future Publishing Limited

         30 Monmouth Street
         Bath BA1 2BW
         Fax: 01225 732398

         and with a copy to:
         The Company Secretary
         Future plc
         30 Monmouth Street
         Bath BA1 2BW
         Fax: 01225 822836

         Any notices to the Licensor shall be sent:

         For the attention of: Alan Shorrocks

         Peak Entertainment Limited
         Bagshaw Hall
         Bagshaw Hill
         Bakewell
         Derbyshire
         DE54 1DL

         Fax to: [01629 813539]

14.5     Choice of Law

         This Agreement shall be governed by English law in every particular
         including formation and interpretation and shall subject to the
         jurisdiction of the English Courts.

15.      TRANSMISSION OF BENEFIT

         Neither party may assign or sub-licence the rights contained in this
         Agreement without the prior written consent of the other party, save to
         one of its group companies.

16.      INTEREST

         If any sums due hereunder remain unpaid for a period in excess of 14
         days after they have become due the unpaid balance will accrue interest
         at the rate of 4% per annum above the base rate for the time being of
         Barclays Bank plc.

17.      FORCE MAJEURE

         If the performance of this Agreement is prevented, restricted or
         interfered with by reason of circumstances beyond the reasonable
         control of the party obliged to perform it the party so affected upon
         giving proper notice to the other party shall be excused from
         performance to the extent of prevention, restriction or interference
         but the party so affected shall use its best efforts to avoid or remove
         such causes of non-performance and shall continue performance under

         the Agreement with the utmost dispatch whenever such causes are removed
         or diminished.

18.      HEADINGS

         The headings of conditions are for convenience of reference only and
         shall not affect their interpretation.

19.      ENTIRE UNDERSTANDING AND VARIATION

19.1     This Agreement embodies the entire understanding of the parties in
         respect of the matters contained or referred to in it and there are no
         promises, conditions or obligations oral or written, expressed or
         implied other than those contained in this Agreement.

19.2     No variation or amendment of this Agreement or oral promise or
         commitment related to it shall be valid unless committed to writing and
         signed by a director of both parties.

20.      THE CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

         This Agreement shall not create any right enforceable by any person not
         a party to it.


FIRST SCHEDULE

SPECIFICATIONS

The Product shall be manufactured to a standard no lower than the sample provided by the Licensee to the Licensor in accordance with Clause 5.2.

The material used in manufacturing the Product shall be of no lower quality than that used in the sample.

The colour and depiction of the Property shall be as specified in the Style Guide.


SECOND SCHEDULE

PEAK ENTERTAINMENT HOLDINGS INC

FROM:

DATE:
ROYALTY PERIOD:
PROPERTY:
TERRITORY:

------------------------------------------------------------------------------------------------------------------------------------
  PRODUCT      COPIES SOLD    TOTAL GROSS SALES       TOTAL GROSS               TOTAL             ROYALTY       LESS          TOTAL
DESCRIPTION   DURING PERIOD   VALUE AT START OF       SALES VALUE            GROSS SALES             %        ADVANCES      PAYABLE
                                   PERIOD          AT END OF PERIOD        VALUE FOR PERIOD                  NOT CLAIMED
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------

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

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

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

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             PLUS VAT
                                                                                                           -------------------------
                                                                                                             TOTAL
                                                                                                           -------------------------


THIRD SCHEDULE

MARKETING

Investment

o (pound)2 million investment into Muffin the Mule TV show, to be launched on CBBC in September 2005 (the "Launch"). 26 episodes have been produced, at least 40 further episodes are to be produced in 2006.

o Regular TV shows of 10 minute duration to appear on CBBC throughout the Term.

Pre-Launch

o Extensive trade advertising and trade show presence prior to the Launch, to promote trade awareness across the broadcast, licensing and consumer product markets.

o Secure key commercial partners in the toy, publishing and home entertainment sectors within each applicable territory prior to the Launch.

o Deliver a focussed Consumer Awareness Campaign in each applicable territory in Autumn 2005.

o Promotion in conjunction with the BBC to include: Blue Peter, front cover of the Radio Times, Muffin the Mule BBC Documentary, extensive coverage across BBC TV and Radio, development of features relating to Muffin the Mule on the CBBC Website as well as further promotions to be agreed in conjunction with Maverick Entertainment and the BBC.

At / Post Launch

o Continue targeted Consumer Awareness Campaign to create maximum awareness for Christmas 2006.

o Publishing, video/DVD and toy line launch of original and new brand material relating to the Property.

o BBC to deliver an awareness campaign in January 2006.

o Roll out of licensing programme in the toy, apparell and gift market in January and February 2006.

o New episodes of Muffin the Mule TV show to be produced and delivered to the BBC regularly throughout the Term.


o Events and public relations campaigns to be delivered to maximise awareness to include outdoor, press and TV advertising in Summer 2006.

o Official anniversary celebrations and profile support and promotions to be run in October 2006.

General

o Licensor to work closely with Maverick Entertainment and the BBC to maximise opportunities for the Property so as to ensure the success of the Property on TV.


Signed                                       )

for and on behalf of                         )

PEAK ENTERTAINMENT LIMITED                   )

by:               /s/ Paula Shorrocks        )



Name:             Paula Shorrocks

Title:            Commercial Director





Signed by                                    )

for and on behalf of                         )

FUTURE PUBLISHING LIMITED                    )

by:                                          )

                  /s/ Mia Walter

Name:             Mia Walter

Title:            Publishing Director


EXHIBIT 10.4

TELEVISION LICENSE AGREEMENT

An Agreement made on July 11, 2005-11-01

By and between                                            and
HOP! CHANNEL LTD.                                         PEAK ENTERTAINMENT LTD
7 Harugei Malchut Street                                  Bagshaw Hall
Tel-Aviv 69714                                            Bakewell, Derbyshire, DE45 1DL
ISRAEL                                                    ENGLAND

("Licensee")                                              ("Licensor")

                                  In respect of
                          The Films/Television Program
                       (herein defined as "the Programs")

WHEREBY IT IS AGREED that in consideration of Licensee's Agreement to make
payments, and in accordance with the Schedule of Terms and General Terms and
Conditions and Schedules A and B, which form an integral part of this Agreement.
The Licensor hereby grants to Licensee all Rights of the Program in the
Territory listed and all conditions as hereafter described.

THE SCHEDULE OF TERMS

The Program:                              Title                                Running Time

                                          The Wumblers                            52x11'
Hour Duration of
Each Program:                             The Wumblers                          9.5 Hours

Total Duration
Of Contract:                              9.5 hours

The Rights:                               1. Basic Cable Television + Pay cable Television
                                          2. Basic Satellite Television + Pay Satellite Television
                                          3. Educational non-broadcast rights for duplication of
                                          VHS cassettes
                                          4. Closed circuit rights
                                          5.  Computer  networks  integrated  through  use  of  any
                                          protocol

The Territory:                            Israel

License Period:                           4 years from the Commencing Date.


Commencing Date:                          January 1st, 2006. The Licensee shall have the right
                                          to broadcast promos, trailers and other such promotional
                                          segments before that date.


Exclusivity:                              Exclusive Cable and Satellite Rights with first 2 (two)
                                          years holdback against all forms of TV media including the
                                          Hebrew version over the Internet.

Number of Licensed
Broadcasts:                               Unlimited runs

License Fee Per Hour:                     400 USD

Total License Fee Per Program:            3,800 USD

Total License Fee
Of Contract:                              3,800 USD

Withholding Tax:                          To be deducted  according to the  International  Withholding
                                          Tax  Agreement  between  Israel  and  Licensor's  country of
                                          origin.  Licensor  hereby  declares  to own  all  beneficial
                                          rights in and to the Program.

Schedule                                  of Payments: In all cases subject to
                                          prior signatures and exchange of this
                                          Agreement and upon receipt of
                                          Licensor's invoice. Full payment upon
                                          receipt of material, not later than 60
                                          days after materials have passed the
                                          technical check but not earlier than
                                          License Commencing Date.

Broadcast Materials                       Beta SP, PAL 625 lines, Analog
To be delivered:                          International version, (Clear Caption)

Additional Materials
To be Supplied:                           a) A VHS copy of the program in its
                                          original version.
                                          b) M&E Sound Track (with Time Code) c)
                                          English Script d) Music Cue Sheets
                                          e) Publicity Materials to include a
                                          minimum of: three (3) JPG photos 300
                                          dpi, two (2) slides and one (1)
                                          English synopsis
                                          f) Completed Program Information Sheet
                                          as set forth in Schedule A.


Material On Loan:                         To be returned to Licensor within ten (10) weeks after
                                          receipt without any changes or damages save fair wear and
                                          tear.


Program                                   Adaptation License shall be entitled
                                          to undertake or authorize the
                                          adaptation of Hebrew and/or Arabic
                                          and/or Russian subtitles and/or by
                                          means of dubbing of Hebrew and/or
                                          Arabic and/or Russian at its sole
                                          discretion and cost.

                                          Licensee has the right to make
                                          additions, deletions and modifications
                                          to the Programs and to make dubbed and
                                          sub-titled versions of the Programs
                                          and any promotional materials for use
                                          in the Territory as Licensee may
                                          determine.


                                          The Rights to such a subtitled or
                                          dubbed version will belong to the
                                          licensee also after the expiration of
                                          the License Period. The Licensee will
                                          provide Licensor with access to the
                                          dubbed version made by Licensee for
                                          the licensed Programs under this
                                          contract, provided Licensor pays
                                          Licensee fifty percent (50%) of all
                                          costs of production, as well as a full
                                          coverage of the costs of material,
                                          transfer and shipping.

                                          Licensor will notify Licensee of the
                                          Programs that are based on books that
                                          have been published in the Territory,
                                          the names of the characters featured
                                          in the Programs and the name of the
                                          local publisher of such books in the
                                          Territory.

Shipping Costs
Charged to:                               Licensee (both ways) - provided
                                          the Licensee's designated shipper was
                                          used in accordance to Licensees
                                          shipping instructions.


Date of delivery of                       As soon as possible, and not later
Material:                                 than two months before License
                                          Commencing Date.


Shipments To Be                           Licensee solely through its designated
Made To:                                  shipping broker (to Be informed),
                                          according to the following details:

                                          ATT: Mr. ORLAD SHERMAN
                                          HOP! CHANNEL LTD.
                                          7 Harugei Malchut Street
                                          Tel Aviv 69714
                                          ISRAEL


Warranty:                                 The Licensor hereby warrants that s/he
                                          is authorized to grant the Rights
                                          herein licensed and that these rights
                                          do not conflict with any Rights
                                          granted to or held by any third party.

Other                                     Terms: In the event of a conflict
                                          between the terms of this Schedule of
                                          Terms and The General Terms and
                                          Conditions, This Schedule of Terms
                                          shall govern.





    /s/ [stamped signature]                 /s/ Paula Shorrocks
           Alona Abt                        Name: Paula Shorrocks
      Executive Director                  Title: Commercial Director
       HOP! CHANNEL LTD.                    PEAK ENTERTAINMENT LTD
           LICENSEE                                LICENSOR

          11.7.2005                                19.7.05
       Date of Signature                      Date of Signature


GENERAL TERMS AND CONDITIONS

1.DEFINITIONS

The following terms shall have the following meanings when used in this Agreement:

Basic Cable Television means a schedule of programming, transmitted by means of coaxial or fiber-optic cable for reception on a television receiver, which is offered as part of package of programming included within the minimum obligatory subscription charge, if any, without a per program, per channel, or other charge of any kind (other than one time or periodic charges for connection to the cable television delivery system and any compulsory fees charged by a government or governmental agency assessed on those who use television sets).

Basic Satellite Television means the up-link transmission of a schedule of programming to a satellite and its down-link transmission to a terrestrial satellite reception dish for the purpose of viewing of the program on a television receiver which is located in the immediate vicinity of the reception dish, which is offered as part of a package of programming included within the minimum obligatory subscription charge, if any, without a per program, per channel, or other charge of any kind (other than one time or periodic charges for connection to the cable television delivery system and any compulsory fees charged by a government or governmental agency assessed on those who use television sets)

Pay Cable Television or Cable Pay Television means a transmission of a program by means of encoded signal over coaxial or fiber-optic cable for reception on a television receiver by means of a decoding device where a charge is made to the viewers for the right to use the decoding device or viewing any channel which transmits the program along with other programming;

Satellite Pay Television means the uplink transmission of a program by means of an encoded signal to a satellite and its down-link transmission to a terrestrial satellite reception dish and a decoding device for the purpose of viewing the program on a television receiver which is located in the immediate vicinity of the reception dish and decoding device where a charge is made to the viewer for the right to use the decoding for viewing a channel which transmits the program along with other programming.

2. LICENSE

2.1 Licensor warrants and represents that subject to the terms and provisions of this Agreement the Rights hereby granted include all Rights in and to the Programs for all purposes of this Agreement, including the Performing Rights to any musical compositions contained in the Programs. Unless anything contained in this Agreement is to the contrary, the Rights as granted hereunder are granted exclusively and will relate to all broadcasting and content transfer platforms, including, but not limited to, Cable Television, Pay Television, Satellite Transmissions`, Close circuit video showings, Free Television, Home Video Sell-Through, Bezeq infrastructure, ADSL, etc.

2.2 Licensor will provide a complete music cue sheet setting forth for each musical composition contained within the programs, the titles, the type of use, duration of use, a name of the composer, lyricist, publisher, copyright proprietor and performing rights society if any.


2.3 Licensor warrants and represents that it owns exclusively of all of the television exhibition rights herein specified in each program and that Licensor has the right to enter into and perform this Agreement and to grant Licensee the rights and license herein provided.

2.4 Unless otherwise provided in this Agreement, all material relating to the Program may not be used, dealt with or otherwise disposed of except as provided herein.

2.5 The rights licensed hereunder shall expressly include the distribution of interactive games associated with the Hebrew version of the programs on the Licensor's web-site, by means of computer networks integrated through use of any protocol now known or hereafter in existence, including, without limitations, the TCP/IP protocol or any successor or similar technology used to access such computer networks (including, without limitation, the "Internet") for use on any viewing device using computer or computer mediated processing units or similar technology now known or hereafter on existence. For the avoidance of doubt nothing in this agreement gives rights to the distribution, merchandising or licensing of video games rights.

3. DELIVERY OF TRANSMISSION AND OTHER MATERIALS

3.1 Subject to the Schedule of Terms and Conditions of this Agreement, Licensor will upon Licensee's written request supply Licensee on loan basis with transmission materials physically suitable for transmission.

3.2 Licensee will bear all air freight costs of one delivery from Licensor to Licensee and delivery from Licensee to Licensor as well as any Israeli customs or broker's fees, providing that materials and shipping documentation is in accordance with licensee's requirements.

4. EXAMINATION OF TRANSMISION MATERIALS

4.1 Licensor will ensure that program materials supplied comply with Licensee's specifications as provided by the Licensee and enclosed as Schedule B, not later than ten days before delivery.

4.2 Upon receipt of the material of the Programs, and not later than sixty-five
(65) days, Licensee shall examine the said material and shall give Licensor written notice if the material is not physically suitable for telecast or home video distribution. Licensor shall promptly remedy such defect or make timely substitutions of a suitable print of the Programs at no additional cost or expense to Licensee. If none of the remedies or substitutions above specified is available and provided that Licensee has given written notice to Licensor to make such remedies or substitutions within a period of three (3) weeks upon receipt of such notice, then Licensee shall be relieved of its proportionate contractual obligations with respect to the portion of the license fee allocable to the program, further more Licensee at its sole discretion shall have the right to terminate this Agreement without liability of any kind to the Licensor. Licensor will refund Licensee for all freight charges caused by this Agreement.

4.3 The licensor undertakes that he will ensure that all Program Materials and/or contents supplied according to this agreement are suitable to children up to the age of 7 years old, and that they do not contain violence and/or scary scenes.


The licensor acknowledges and agrees that if the licensee will decide, in his own discretion, that the material programs are not suitable for broadcasting, for the reasons mention in this section above, then Licensee shall be relieved of its proportionate contractual obligations with respect to the portion of the license fee allocable to the program, and the licensor will not have any claim against the licensee, directly and/or indirectly, under the license agreement and/or this agreement.

5. TERMINATION PROVISIONS:

5.1 Upon the expiration or other termination of this License term or the last permitted telecast of each Program, whichever is earlier, all material furnished by Licensor, including material manufactured on behalf of Licensee, shall be returned to Licensor. Insofar as Licensee has paid for the material delivered by Licensor and in the event that Licensee shall so elect, Licensee may either return such material to Licensor or destroy or erase it, in which case Licensee upon Licensor's request will provide Licensor with a certification of destruction.

6. WITHOLDING TAXES

6.1 In the event that any sums are or may be demanded from the licensee by the governments or other fiscal authorities in the Territory, or any portion thereof, the Licensee shall be entitled to deduct such sums from the license fees payable hereunder provided that Licensee shall furnish to the Licensor an official receipt of the applicable taxation authority for all such amounts so withheld.

7. EXHIBITION OF PROGRAMS:

7.1 Licensee may dub or subtitle or cause to be dubbed or subtitled the Programs only in Hebrew and/or Arabic and/or Russian without any cost or expense to Licensor. The rights to such a subtitled or dubbed version will belong to the Licensee also after the expiring of the agreed term of contract. The Licensee will provide Licensor with access to the dubbed version made by Licensee for the licensed Programs under this contract, provided Licensor pays Licensee fifty percent (50%) of all costs of production, as well as a full coverage of the costs of material, transfer and shipping.

7.2 Licensor will deliver Hebrew and/or Arabic and/or Russian language versions of the programs to licensee where available at no additional cost.

7.3 Each broadcast of the ones agreed in the Schedule of Terms covers the possibility of two (2) re-runs within forty-eight (48) hours.

7.4 Licensee may grant the right to edit the Program in order to adjust it to broadcasting schedules, censorship requirements, commercial insertions, technical considerations and as may be required by Law or regulatory Authorities in the Territory.


8. ADVERTISING:

8.1 Licensee shall have the right to advertise, promote and publicize the programs in the exercise of its rights hereunder in all media and to authorize others to do so.

8.2 Licensee may, at its sole discretion, broadcast or give authorization to broadcast in any media including Free T.V, Cable T.V, Satellite, Internet (but only on the Licensee's web-site and for a duration of no more than 3 minutes per each single broadcast) and/or other media, extracts from the Programs for purposes of advertisement or publicity. Provided that no such broadcast shall exceed three (3) minutes in length. Licensee may, at its sole discretion, advertise images from the Program on: billboard out door events, activity pages and/or books, sold children magazines for purposes of advertisement or publicity of the Programs.

Licensor shall make available at reasonable cost to licensee any advertising or promotional material owned by licensor that is available for distribution in the territory.

9. SPECIAL TERMS:

9.1 The Licensee shall have the option to renew and/or purchase the sequel of a series and/or Programs on commercial terms.

9.2 The Licensee shall have a first refusal right to broadcast the Programs by way of Video on Demand.

9.3 The Licensee shall have a first refusal right to license and/or purchase, if available, any "Merchandise"(such as T-shirts etc.) and/or Home Video of any Program at commercial terms.

9.4 The Licensee shall have a first refusal right to license and/or purchase and/or create and /or produce and /or broadcast and/or to program and/or design computer programs and/or software, including but not limited to computer games and/or interactive television games, based on the Programs or the Programs' characters.

10. FORCE MAJEURE

If Licensor is prevented from making timely delivery of transmission materials of the Programs, as herein provided, or if Licensee is prevented from exhibiting the programs or from making the payments as per the agreed upon payment, by reason of any act of god, strike, labor dispute, fire, flood, delay in transportation, failure or delay of laboratory, war, public disaster, or any other cause or reason beyond the control of Licensor or Licensee, as case may be, such condition shall not be deemed to be a breach of this Agreement and Licensee may extend the term of this Agreement for a period co-extensive with the period or periods of such force majeure, which extended period shall commence to run immediately upon the expiration of the term of this Agreement.

11. CONFIDENTIALITY


The terms of this Agreement and any information relating to the business affairs of either party, that may come to the attention of the other are confidential and may not be revealed to any third party other than each party's respective professional advisors, without the express permission of the other party. The provisions of this Clause 11 shall not apply to information which is or becomes publicly available or information which is required to be disclosed pursuant to a court order or applicable law, rules or regulations.

12. WARRANTIES

12.1 Licensor represents and warrants to Licensee that to the best of its knowledge the Programs are not defamatory of any individual or company. The Programs do not infringe on the proprietary or other rights of any government, individual, firm, company or corporation. It has the full right under copyright and all distribution rights required to grant this the License and that the broadcasting of the Programs will not violate the rights of others.

12.2 Licensor shall indemnify and hold the Licensee harmless from and against any and all claims, actions, damages, losses, liabilities and expenses (including reasonable attorney's fee) arising out of any broadcast of the Programs or that Licensee may suffer or incur as a result of the breach of any of Licensor warranties or as a result of a failure by Licensor to perform its obligations under this Agreement.

13. AGREEMENT COMPLETE

This Agreement mat not be altered, modified, renewed and extended except in writing and signed by both parties. This Agreement is complete and embraces the entire understanding between the parties, all prior understandings, either oral or written having been merged herein.

14. RIGHT TO ASSIGN

Licensor may not assign this Agreement, either voluntarily or by operation of law without the prior written consent of Licensee. Licensee may assign this agreement or any interest herein, to any subsidiary or affiliate corporation (e.g. Gold Zebra Communications Ltd.).

15. APPLICABLE LAW AND JURISDICTION

This Agreement shall be governed and interpreted in all respects according to the laws of Israel and the Tel Aviv Courts and these bodies shall be the competent courts of jurisdiction.

16. WAIVER

The waiver by either party hereto of any breach or default by the other party shall not be construed to be a waiver of any other breach or default, or of the same breach or default occurring thereafter.


17. NOTICES:

Any notices given or required to be given hereunder shall be in writing and shall be sent by fax or by recorded or registered post to the parties as their respective addresses shown overleaf and shall be deemed to have been delivered six (6) days after the date of posting thereof if posted or when the proper answerback code is received by the sender if sent by fax.

18. CLAUSE HEADINGS

The Clause headings in this License are for information only and do not form part of the License.

19. EFFECT OF INVALIDITY OF PROVISION It is understood and agreed that in the event any provision of this Agreement or any amendments thereto shall be found, by an authorized court of law, to be contrary to any applicable law or regulation and shall be declared invalid, the said invalidity shall not affect the effect of the other provisions of this agreement and of any amendments thereto, which shall, notwithstanding, continue in full force and effect.

/s/ [stamped signature]                            /s/ Paula Shorrocks
       Alona Abt                                  Name: Paula Shorrocks
  Executive Director                            Title: Commercial Director
   HOP! CHANNEL LTD.                              PEAK ENTERTAINMENT LTD
       LICENSEE                                          LICENSOR

11.7.2005 19.7.05 Date of Signature Date of Signature


Program Information Sheet
TELEVISION LICENSE AGREEMENT                                          LICENSE AGREEMENT N(degree)
Schedule A
Title:
Running time:         eps X        minutes
              --------      -------
Genre:        [ ] Cel  Animation        [ ] Model Animation            [ ] Puppets           [ ] Live Action            [ ] Other:
Origin of the Program:
Year of Copyright:
Authors/Directors:
Original Language:
International prizes/awards:
                                        --------------------------------------------------------------------------------------------
                                        --------------------------------------------------------------------------------------------
                                        --------------------------------------------------------------------------------------------

Title:
Running time:         eps X        minutes
              --------      -------
Genre:        [ ] Cel  Animation        [ ] Model Animation            [ ] Puppets           [ ] Live Action            [ ] Other:
Origin of the Program:
Year of Copyright:
Authors/Directors:
Original Language:
International prizes/awards:
                                        --------------------------------------------------------------------------------------------
                                        --------------------------------------------------------------------------------------------
                                        --------------------------------------------------------------------------------------------

Title:
Running time:         eps X        minutes
              --------      -------
Genre:        [ ] Cel  Animation       [ ] Model Animation            [ ] Puppets           [ ] Live Action            [ ] Other:
Origin of the Program:
Year of Copyright:
Authors/Directors:
Original Language:
International prizes/awards:
                                        --------------------------------------------------------------------------------------------
                                        --------------------------------------------------------------------------------------------
                                        --------------------------------------------------------------------------------------------

Title:
Running time:         eps X        minutes
              --------      -------
Genre:        [ ] Cel  Animation       [ ] Model Animation            [ ] Puppets           [ ] Live Action            [ ] Other:
Origin of the Program:
Year of Copyright:
Authors/Directors:
Original Language:
International prizes/awards:
                                        --------------------------------------------------------------------------------------------
                                        --------------------------------------------------------------------------------------------
                                        --------------------------------------------------------------------------------------------


Schedule B: Technical Specifications

1. Textless opening and closing scenes

2. Separated list of credits in English for each title and eps

3. Analog Betacam SP Pal or SX Pal with: Separated M&E track on tracks 3 & 4. English Mix on tracks 1 & 2

4. Sound level: + OVU = 4dbu. The level of sound peaks should not be higher than + 3db.

5. Time Code: Start of each Beta should be as follows:

Time code in 01:00:00:00 should be continuous until the program ends according to the following order:

1. T.C. 00:57:00:00 BLACK and SILENCE for duration of 1 minute;
2. T.C. 00:58:00:00 TONE + BARS for duration of 1 minute;
3. T.C. 00:59:00:00 BLACK and SILENCE for duration of 30 seconds;
4. T.C. 00:59:30:00 SLATE* 20 seconds;
5. T.C. 00:59:50:00 BLACK and SILENCE for duration of 10 seconds;
6. T.C. 01:00:00:00. This is where the program should start;
7. T.C. in and out should always be for full frame only; T.C. in and out should always be with a full picture, thus avoiding a continuing fade in or fade out.

SLATE in English

1. Production company/Producer
2. Name of title - in English
3. Name of episode
4. Name or number of series/season

5. Information - sound tracks:
Track 1&2 Mix
Tracks 3& 4 M&E

6. Duration of episodes


Information that should appear on the cover of the Beta and on the sticker of the cassette:
|X| Company name
|X| Name of Program
|X| Tittle of each eps
|X| Episode number of the cassette: names of episodes with time code in and time code out.

Information about the tracks
|X| 1&2 Mix
|X| 3&4 M&E + stereo/mono

Attention: Please add a page with a list of number and names of episodes with time code in and time code out.


EXHIBIT 10.5

LICENCE AGREEMENT NUMBER MTM003

SUMMARY OF TERMS

The Licensee: Name: Martin Yaffe International Ltd Address: Arrow Mill Rochdale

OL11 2QN

                                        Contact:  Peter Hatton
                                            tel:  01706 717800
                                            fax:  01706 717801
                                         e-mail:  peterh@martinyaffe.com

The Property:                        Muffin The Mule

The Principal:                       Maverick Entertainment and SMPL

The Licensor:                        Peak Entertainment Ltd

The Products:                        Rocking Horse and Stick Horse

Channels of Distribution:            All

The Territory:                       United Kingdom & Eire

The Term:                            1st June 05 to 31st Dec 07

Advance Royalty:                     (pound)1,500 + Vat on signature

Guaranteed Royalty:                  (pound)7,500 + Vat (includes the above
                                     advance) paid  quarterly  over the Term.

Agreed Percentage:                   10% of net selling price
                                     12% of F.O.B price

Number of Samples:                   12 of each product MUST BE SUPPLIED


This LICENCE AGREEMENT is made this 16 day of Aug 2005 between:

THE PARTIES:

1. PEAK ENTERTAINMENT LTD, Bagshaw Hall, Bakewell, Derbyshire, DE45 1DL ("the Licensor")

2. THE LICENSEE: whose full name and trading or registered address is referred to on the Summary of Terms Sheet ("the Licensee")

RECITALS

(A) The Licensor controls all rights of exploitation in the Property.

(B) The Licensee wished to obtain a licence to manufacture, market, sell and distribute the Products incorporating the Property and the Licensor has agreed to grant such right.

1. DEFINITIONS

"The Intellectual Property" - means copyright, trade mark and other rights in the Property.

"Nett Selling Price" - means the gross price at which the Licensee sells the Product in an arms length transaction less only Value Added Tax and normal trade discounts.

"Notice" - means notice in writing served in accordance with the provisions of sub-clause 15.4.

"The Royalties" - means the payments to be made to the Licensor by the Licensee under Clause 4.

"The Specifications" - means the specifications set out in the first schedule.

"The Style Guide" - means the documents provided by the Licensor to the Licensee from time to time giving details of the Property including the papers that have been given to the Licensee before the signing of this Agreement.

"Channels of Distribution" - means all channels of distribution

The words referred to in the first column of the Summary of Terms shall have the meanings attributed to them in the second column of the Summary of Terms Sheet.


2. GRANT

2.1 In consideration of the obligations undertaken by the Licensee under this Agreement the Licensor grants to the Licensee an exclusive licence to apply the Property to the manufacture, marketing, distribution and sale of the Products in the Territory in accordance with the Specifications and the Style Guide and under the terms of this Agreement in the Territory.

2.2 The Licensee shall only market and solicit orders for the Products in the Territory. If it receives orders for the supply of Products outside the Territory it will immediately inform the Licensor thereof.

2.3 The Licensor reserves the right to remove any of the Products listed in the Summary of Terms where they are not on sale to the trade in accordance with Clause 7.1 in any part of the Territory.

2.4 The Licensor reserves all rights not specifically granted herein including the right to grant licences of the Property to other licensees in the Territory in respect of other product categories.

2.5 The Licensor also reserves the right to request any third party to manufacture the Products for promotional purposes.

3. TERM

This Agreement shall be for the Term unless terminated earlier in accordance with Clause 9 herein.

4. ROYALTIES

4.1 In consideration of the rights granted by the Licensor the Licensee shall pay to the Licensor a royalty of the Agreed Percentage of the Net Selling Price of each unit of the Products sold by the Licensee (less only normal trade discounts and Product returns actually credited).

4.2 The Licensee shall within 30 days of the 30th March, 30th June, 30th September and 30th December in each year deliver to the Licensor a statement giving particulars of all sales of the Products effected by the Licensee since the last statement date (and in respect of the first statement; since the date of this Agreement) and showing the total royalty payable to the Licensor and on receipt of the Licensor's invoice shall deliver to the Licensor a remittance for the greater of the full amount of that royalty or an equal quarterly instalment of the Guaranteed Royalty (less only the pro rata Advance applicable for the


relevant quarter). The form of the statement is set out in the second Schedule.

4.3 The Licensee shall keep and maintain separate and detailed accurate accounts and records so as to show the quantity and Net Selling Price of Products sold, used or otherwise disposed of by the Licensee for each royalty period giving separately the figures for each product. The Licensor shall have the right at reasonable hours, and on giving the Licensee reasonable notice, to appoint a representative (being a qualified, certified or chartered accountant) to audit the said accounts and records and if such audit reveals a discrepancy it shall be collected forthwith. It is further agreed that if such discrepancy is 5% or more in the Licensee's favour, the Licensee shall within 14 days of the date of the relevant invoice pay the Licensor's reasonable auditing fees and expenses in addition to any other payments due and interest on the discrepancy at 4% above the base lending rate from time to time of National Westminster Bank Plc.

4.4 All sums payable by the Licensee to any person pursuant to this Agreement shall be paid free and clear of all deductions (except normal trade discounts) or withholdings whatsoever, save only as may be required by any applicable law.

5. SPECIFICATION AND QUALITY

5.1 The Licensee shall manufacture the Products according to the Specifications and the Style Guide or such other specifications as the Licensor may from time to time substitute and at all times ensure that the Products are of the highest quality attainable within the Specifications, in particular the Licensee is to ensure that the Products comply in all respects with the provisions of the relevant Toy Safety Regulations (where applicable) and all other relevant statutes, regulations and codes of practice in respect of safety and quality.

5.2 The Licensee shall submit for the Licensor's written approval samples of the Products, any articles to be sold with the Products and all packaging material, display, advertising or publicity material and shall refrain from distribution, sales or publication of any of the Products until such approval shall have been first had and obtained. The Licensor reserves the right to require the Licensee to make any alterations that the Licensor may require to such items.

5.2.1 The Licensee shall comply with this Clause 5.2 at each and every stage of development of the Products identified as follows:


PRODUCT                   PACKAGING

Rough visual of concept   Rough visual of concept
Hand/Sample/Prototype     Rough artwork
Pre-production sample     Finished artwork
Production sample         Artwork Proof
                          Finished production packaging

5.2.2 Approval will be granted on design, quality and compliance with the Style Guide and the copyright lines and all designs must be consistent with the identity and image of the property.

5.2.3 Approval is not granted on the basis of any safety or fitness for purpose aspect of the Products as such aspects are the sole responsibility of the Licensee. The Licensee shall produce to the Licensor when requested all relevant safety certificates.

5.3 The Licensee shall ensure that all units of the Products including their wrappings and packaging are of the same description as the sample approved by the Licensor in accordance with Clause 5.2.

5.4 The Licensee shall supply to the Licensor the Number of Samples of the Products free of charge within three months of the first production of the Products.

5.5 If the Licensee employs a third party to manufacture the Products the Licensee shall:

5.5.1 put in place adequate controls to ensure that the manufacturer only manufactures the Product for the Licensee;

5.5.2 ensure that title to any plates or dies manufactured specially for production of the Products are the property of the Licensee and shall be returned to the Licensee by the manufacturer on demand;

5.5.3 only employ manufacturers after a full enquiry has been made to ensure that they are of proper status; and

5.5.4 ensure that any Products manufactured meet the Specifications.

5.6 If the Licensee or its third party manufacturer require imagery or artwork additional to the Style Guide, the Licensee agrees to pay the price quoted from time to time by the Licensor in respect thereof.


6. USE AND PROTECTION OF INTELLECTUAL PROPERTY

6.1 Every unit of the Products and all packaging, advertising and point of sale materials used in connection therewith and which incorporates the Intellectual Property shall bear the following statement which shall not be varied in any way by the Licensee without prior written consent of the Licensor:

"(C) 2005 Maverick Entertainment and SMPL . Licensed by Peak Entertainment Ltd"

6.2 The Licensee shall not use any of the Property as part of the Licensee's name or the name of any entity associated with it without the prior written consent of the Licensor.

6.3 The Licensee shall not during the subsistence of this Agreement or at any time thereafter register or use any of the Intellectual Property in its own name as proprietor.

6.4 The Licensee recognises the Licensor's title to the Intellectual Property and shall not claim any right title or interest in the Intellectual Property or any part of it save as is granted by this Agreement. Any Intellectual Property right that the Licensee shall acquire to the Products is hereby assigned to the Licensor and, if appropriate, the Licensee shall enter into a legal assignment of such Intellectual Property without payment.

6.5 The Licensee recognizes that the copyright lines in any literary, artistic, musical or dramatic work generated or arising from the activities of the Licensee under this Agreement shall be the property of the Licensor and the Licensee with full title guarantee hereby assigns such copyright and all rights related thereto to the Licensor. If the Licensee requires or employs a third party to create any work in connection with this Agreement in respect of which copyright exists, the Licensee shall, prior to the third party creating the said work, obtain an assignment of such copyright and related rights in favour of the Licensor and the Licensee shall do all things necessary to ensure that the said copyright shall vest in the Licensor.

6.6 The Licensee shall promptly call to the attention of the Licensor the use of any part of the Property by any third party or any activity of any third party which might be in the opinion of the Licensee amount to infringement or passing off.


6.7 The Licensee shall not assign the benefit of this Agreement or grant any sub-licence without prior written consent of the Licensor.

6.8 The Licensee shall hold all goodwill generated by its operations under this Agreement as trustee for the benefit of the Licensor.

6.9 Any designs or other works derived by the Licensee from the Intellectual Property or any part of it shall be held by the Licensee on trust for the Licensor and at the Licensor's request shall be assigned to the Licensor without compensation.

6.10 The Licensee shall not, except with the prior written consent of the Licensor, make use of the name of the Licensor in any connection otherwise than is expressly permitted by this Agreement.

6.11 If required by the Licensor, the Licensee will join with the Licensor to become a registered user of the Intellectual Property or any part of it.

7. LICENSEE'S OBLIGATION AS TO MARKETING

7.1 The Licensee shall ensure that the Products shall be on sale to the trade within twelve months, and on sale to the public within fifteen months of the commencement date of the Term.

7.2 It is agreed by the Licensee that the Products will be sold only to recognised wholesale firms for resale to retail firms or to retail firms for resale to the public or direct to the public.

7.3 The Licensee shall ensure so far as it is reasonable practicable that the Products are not supplied for resale as an integral part of any other product and shall not be supplied either directly or indirectly to other manufacturers or to hawkers, peddlers, street vendors and the like or to any person intending to distribute the Products gratuitously.

7.4 The Licensee shall at all times use its reasonable endeavors to promote and sell the Products in the Territory.

7.5 The Licensee shall only market and sell Products in an ethical manner having regard at all times to the image and reputation of the Property and shall therefore use good taste at all times.


7.6 The Licensee shall not harm, misuse or bring into disrepute the Property or the Licensor.

7.7 The Licensee shall distribute and sell the Products only through the Distribution Channels as specified in Clause 1 of this Agreement.

8. ACTION AGAINST THIRD PARTIES

8.1 The Licensee shall have the no right to take action against third parties in respect of the Intellectual Property and if required to do so by the Licensor the Licensee shall co-operate fully with the Licensor in any such action the Licensee's expenses incurred in doing so being borne by the Licensor.

8.2 All damages shall be the exclusive property of the Licensor provided that the Licensee shall be entitled to set-off any expenses which is able to claim from the Licensor pursuant to Clause 8.1.

8.3 Any decisions to take action against third parties shall be solely at the discretion of the Licensor.

9. TERMINATION

Without prejudice to any right or remedy the Licensor may have against the Licensee for breach or non-performance of this Agreement, the Licensor shall have the right to immediately terminate this Agreement by serving the Licensee with written notice to that effect in the following circumstances.

9.1 On the Licensee committing a breach of any provision of this Agreement and failing to remedy such breach within 30 days of receiving written notice specifying the breach and requiring remedy thereof;

9.2 if the Licensee shall have any distress or executor levied upon it's goods or effects;

9.3 on the Licensee becoming unable to pay its debts with the meaning of
Section 123 Insolvency Act 1986, passing any resolution to wind itself up or on petition being presented to wind up the Licensee or if a Receiver or an Administrative Receiver of the Licensee's undertaking, property or assets or any part thereof is appointed or if an application is made for the appointment of an Administrator of the Licensee, or if the Directors of the Licensee propose a composition of debts or scheme of arrangements.


9.4 on the Licensee for any reason whatever nature being substantially prevented from performing or becoming unable to perform its obligations under this Agreement.

9.5 on the Licensee assigning, sub-contracting or attempting to sub-contract or assign this Agreement without the prior written consent of the Licensor;

9.6 if control of the Licensee shall pass from the present shareholders or owned or controlled by other persons whom the Licensor shall in it's absolute discretion regard as unsuitable;

9.7 if the Licensee ceases or threatens to cease carrying on it's usual business for a period in excess of thirty (30) working days consecutively.

10. TERMINATION CONSEQUENCES

10.1 Upon termination of this Agreement whether by expiry of the Term or otherwise the Licensee shall forthwith discontinue manufacture of the Products.

10.2 If the Licensee shall have any remaining stocks of the Products at the time of termination they may be disposed of by the Licensee in compliance with the terms of this Agreement for three months after termination but not otherwise.

10.3 Any Products in the course of manufacture at the time of termination may be completed within 14 days and disposed of in compliance with Clause 10.2 of this Agreement but not otherwise.

11. LICENSORS WARRANTY

Licensor represents and warrants to the Licensee that:

11.1 It has and will have throughout the Term of this Agreement, the right to exploit the Property in all media throughout the Territory.

11.2 The rights granted herein do not, so far as the Licensor is aware, violate or infringe any agreements, rights or obligations existing, or to be created during the Term, of any person, firm or corporation.

12. INDEMNITY


12.1 The Licensee shall indemnify and hold harmless the Licensor from and against any liability, loss, claim or proceedings whatsoever arising under any statute or at Common Law in respect of personal injury to or the death of any person and any injury or damage to any property real or personal arising from the sale of the Products unless such liability arises from the neglect or default of the Licensor.

12.2 The Licensee shall have in force Public and Product Liability Insurance for not less than the equivalent of 1 million satisfactory to the Licensor and with the Licensor as additional named insured.

12.3 The policies of insurance shall be shown to the Licensor whenever it requests together with satisfactory evidence of payment of premiums.

12.4 The Licensor represents and warrants to Licensee that to the best of its knowledge the rights granted herein do not infringe on the proprietary or other rights of any government, individual, firm, company or corporation. It has the full right to grant this Licence and the Licensor shall indemnify and hold the Licensee harmless from and against any and all claims, actions, damages, losses, liabilities and expenses arising out of any claim that the Licensee may suffer in relation to its use of the rights granted in this agreement.

12.5 Neither Party shall be liable to the other under or in relation to this Agreement for any indirect or consequential loss (including without limitation pure economic loss, loss of profits, loss of business, depletion of goodwill).

13. INSPECTION

The Licensee shall permit the Licensor at all reasonable times to inspect the Licensee's premises in order to satisfy itself that the Licensee is complying with its obligations under this Agreement.

14. MISCELLANEOUS

14.1 No Waiver

No waiver by the Licensor of any of the Licensee's obligations under this Agreement shall be deemed effective unless made by the Licensor in writing nor shall any waiver by the Licensor in respect of any breach be deemed to constitute waiver of or consent to any subsequent breach by the Licensee of it's obligations.

14.2 Severance

In the event that any provision of this Agreement is declared by any judicial proceedings or other competent authority to be void, voidable or illegal the remaining provisions shall continue to apply unless the Licensor at the


Licensor's discretion decides that the effect is to defeat the original intentions of the Parties in which case it shall be entitled to terminate the Agreement by 30 days notice in which event the provisions of Clause 10 shall apply.

14.3 No Agency or Partnership

The Parties are not partners nor joint venturers nor is the Licensee entitled to act as the Licensor's agent nor shall the Licensor be liable in respect of any representation act or omission of the Licensee whatever nature.

14.4 Notices

Any Notice to be served on either of the Parties by the other shall be sent by pre-paid recorded delivery or registered post or by facsimile to the address stated in Clause 1 and shall be deemed to have been received by the addressee with (three) 3 working days after posting or 24 hours of transmission if sent by facsimile.

14.5 Choice of Law

This Agreement shall be governed by English law in every particular including formation and interpretation and shall subject to the jurisdiction of the English Courts.

15. TRANSMISSION OF BENEFIT

15.1 This Agreement shall be binding upon and inure to the benefit of the Licensor and its successors and assigns.

15.2 The Licensee may not assign or sub-licence the rights contained in this Agreement.

16. INTEREST

If any sums due hereunder remain unpaid for a period in excess of 14 days after they have become due to the Licensor the unpaid balance will accrue interest at the rate of 4% per annum above the base rate for the time being of Barclays Bank Plc.

17. FORCE MAJEURE

If the performance of this Agreement is prevented, restricted or interfered with by reason of circumstances beyond the reasonable control of the party obliged to perform it the party so affected upon giving proper notice to the other party shall be excused from performance to the extent of prevention, restriction or interference but the party so affected shall use its best efforts to avoid or remove such causes of non-performance and shall continue performance under the Agreement with the utmost dispatch whenever such causes are removed or diminished.


18. HEADINGS

The headings of conditions are for convenience of reference only and shall not affect their interpretation.

19. ENTIRE UNDERSTANDING AND VARIATION

19.1 This Agreement including its Summary of Terms embodies the entire understanding of the parties in respect of the matters contained or referred to in it and there are no promises, conditions or obligations oral or written, expressed or implied other than those contained in this Agreement.

19.2 No variation or amendment of this Agreement or oral promise or commitment related to it shall be valid unless committed to writing and signed by a director of the Owner.

20. THE CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

This Agreement does not create any right enforceable by any person nor a party to it provided that a person who is the permitted assignee or a successor to the Licensor is deemed to be a party to this Agreement.


SPECIFICATIONS

The Product shall be manufactured to a standard no lower than the sample provided by the Licensee to the Licensor in accordance with Clause 5.2.

The material used in the manufacturing the Product shall be of no lower quality than that used in the sample.

The colour and depiction of the material shall be as specified in the Style Guide

SIGNED BY /s/ Paula Shorrocks

FOR AND ON BEHALF OF THE LICENSOR




SIGNED BY /s/

FOR AND ON BEHALF OF THE LICENSEE


FROM:

DATE:
ROYALTY PERIOD:
PROPERTY:
TERRITORY:

---------------- ---------------- ---------------- --------------- ---------------- -------------- ----------------- --------------
     PRODUCT        PIECES SOLD      TOTAL GROSS     TOTAL GROSS        TOTAL           ROYALTY           LESS            TOTAL
   DESCRIPTION     DURING PERIOD     SALES VALUE     SALES VALUE     GROSS SALES           %            ADVANCES         PAYABLE
                                     AT START OF      AT END OF       VALUE FOR                      NOT CLAIMED
                                        PERIOD         PERIOD          PERIOD
---------------- ---------------- ---------------- --------------- ---------------- -------------- ----------------- --------------
---------------- ---------------- ---------------- --------------- ---------------- -------------- ----------------- --------------

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

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

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

---------------- ---------------- ---------------- --------------- ---------------- -------------- ----------------- --------------
                                                                                                    PLUS VAT
                                                                                                   ----------------- --------------
                                                                                                    TOTAL
                                                                                                   ----------------- --------------

Signed
(Licensee)

Please complete in capital letters and return to:
Peak Entertainment Ltd
Bagshaw Hall, Bagshaw Hill, Bakewell, Derbyshire, DE45 1DL


EXHIBIT 10.6

                       LICENCE AGREEMENT NUMBER ..........

                                SUMMARY OF TERMS

The Licensee:                              Name:  Toontastic Publishing Ltd
                                        Address:  Office Block 1 , Southlink Business Park
                                                  Southlink
                                                  Oldham OL4 1DE


                                        Contact:  Alan Young (General Manager)
                                            tel:  0161 6240414
                                            fax:  0161 628 4655
                                         e-mail:  alan.young@toontasticpublishing.com

The Property:                        Pretty Pony Club

The Principal:                       W + P Shorrocks

The Licensor:                        Peak Entertainment Ltd

The Products:                        Monthly Comic with Covermount

Channels of Distribution:            All

The Territory:                       United Kingdom & Eire

The Term:                            1st March 05 to 31st August  05

Advance Royalty:                     (pound)500 + Vat on signature

Guaranteed Royalty:                  Nil

Royalty Rate:                        4% of net selling price on all PPC publishing  formats , on special packs
                                     1 PPC comic 1.3% , 2 PPC comics 2.3%
                                     5% of Toontastic  purchase  price on  covermounts  manufactured  by third
                                     party of PPC toy.


Number of Samples:                   5 of each product MUST BE SUPPLIED


This LICENCE AGREEMENT is made this day 1st September 2005 Between:

THE PARTIES:

1. PEAK ENTERTAINMENT LTD whose registered office is at Bagshaw Hall,Bagshaw Hill, Bakewell, Derbyshire, DE45 1DL. ("the Licensor")

2. THE LICENSEE: whose full name and trading or registered address is referred to on the Summary of Terms Sheet ("the Licensee")

RECITALS

(A) The Licensor controls all rights of exploitation in the Property.

(B) The Licensee wished to obtain a licence to manufacture, market, sell and distribute the Products incorporating the Property and the Licensor has agreed to grant such right.

1. DEFINITIONS

"The Intellectual Property" - means copyright, trade mark and other rights in the Property.

"FOB Price" - means the gross price at which the Licensee sells the Product in an arms length transaction to its customers in an overseas Territory less only normal trade discounts.

"Notice" - means notice in writing served in accordance with the provisions of sub-clause 15.4.

"The Royalties" - means the payments to be made to the Licensor by the Licensee under Clause 4.

"The Specifications" - means the specifications set out in the first schedule.

"The Style Guide" - means the documents provided by the Licensor to the Licensee from time to time giving details of the Property including the papers that have been given to the Licensee before the signing of this Agreement.

"Channels of Distribution" - means all channels of distribution


The words referred to in the first column of the Summary of Terms shall have the meanings attributed to them in the second column of the Summary of Terms Sheet.

2. GRANT

2.1 In consideration of the obligations undertaken by the Licensee under this Agreement the Licensor grants to the Licensee an exclusive licence to apply the Property to the manufacture, marketing, distribution and sale of the Products in the Territory in accordance with the Specifications and the Style Guide and under the terms of this Agreement in the Territory.

2.2 The Licensee shall only market and solicit orders for the Products in the Territory. If it receives orders for the supply of Products outside the Territory it will immediately inform the Licensor thereof.

2.3 The Licensor reserves the right to remove any of the Products listed in the Summary of Terms where they are not on sale to the trade in accordance with Clause 7.1 in any part of the Territory.

2.4 The Licensor reserves all rights not specifically granted herein including the right to grant licences of the Property to other licensees in the Territory in respect of other product categories.

2.5 The Licensor also reserves the right to request any third party to manufacture the Products for promotional purposes.

3. TERM

This Agreement shall be for the Term unless terminated earlier in accordance with Clause 10 herein.

4. ROYALTIES

4.1 In consideration of the rights granted by the Licensor the Licensee shall pay to the Licensor a royalty of the Agreed Percentage of the Net Selling Price of each unit of the Products sold by the Licensee (less only normal trade discounts). Upon the signing of this Agreement the Licensee shall pay to the Licensor the Advance Royalty which shall not in any circumstances be repayable either in whole or in part but which shall be set off against royalty payments payable during the Term of this Agreement. All payments made by the Licensee to the Licensor pursuant to this Agreement shall be made by telegraphic transfer to the following account:


Account:          Peak Entertainment Ltd
Bank:             Lloyds TSB Bank Plc
Account No:       2560768
Sort Code:        30-00-09

4.2 The Licensee shall within 30 days of the 30th March, 30th June, 30th September and 30th December in each year deliver to the Licensor a statement giving particulars of all sales of the Products effected by the Licensee since the last statement date (and in respect of the first statement; since the date of this Agreement) and showing the total royalty payable to the Licensor and at the same time deliver to the Licensor a remittance for the greater of the full amount of that royalty or an equal quarterly installment of the Guaranteed Royalty (less only the pro rata Advance applicable for the relevant quarter). The form of the statement is set out in the second Schedule.

4.3 If the Licensee's sales of the Product during the term or before the termination date (Clause 10) if sooner are insufficient to generate royalties equal to the Guaranteed Royalty at the end of the Term, or termination date (Clause 10), whichever the sooner, the Licensee shall pay to the Licensor the difference between royalties generated throughout the Term or before the termination date (Clause 10) if sooner and the Guaranteed Royalty.

4.4 The Licensee shall keep and maintain separate and detailed accurate accounts and records so as to show the quantity and Net Selling Price of Products sold, used or otherwise disposed of by the Licensee for each royalty period giving separately the figures for each product. The Licensor shall have the right at reasonable hours, and on giving the Licensee reasonable notice, to appoint a representative (being a qualified, certified or chartered accountant) to audit the said accounts and records and if such audit reveals a discrepancy it shall be collected forthwith. It is further agreed that if such discrepancy is 5% or more in the Licensee's favour, the Licensee shall within 14 days of the date of the relevant invoice pay the Licensor's reasonable auditing fees and expenses in addition to any other payments due and interest on the discrepancy at 4% above the base lending rate from time to time of Lloyds TSB Bank Plc.

4.5 All sums payable by the Licensee to any person pursuant to this Agreement shall be paid free and clear of all deductions (except normal trade discounts) or withholdings whatsoever, save only as may be required by any applicable law.


5. SPECIFICATION AND QUALITY

5.1 The Licensee shall manufacture the Products according to the Specifications and the Style Guide or such other specifications as the Licensor may from time to time substitute and at all times ensure that the Products are of the highest quality attainable within the Specifications, in particular the Licensee is to ensure that the Products comply in all respects with the provisions of the relevant Toy Safety Regulations (where applicable) and all other relevant statutes, regulations and codes of practice in respect of safety and quality.

5.2 The Licensee shall submit for the Licensor's written approval samples of the Products, any articles to be sold with the Products and all packaging material, display, advertising or publicity material and shall refrain from distribution, sales or publication of any of the Products until such approval shall have been first had and obtained. The Licensor reserves the right to require the Licensee to make any alterations that the Licensor may require to such items.

5.2.1 The Licensee shall comply with this Clause 5.2 at each and every stage of development of the Products identified as follows:

PRODUCT                   PACKAGING

Rough visual of concept   Rough visual of concept
Hand/Sample/Prototype     Rough artwork
Pre-production sample     Finished artwork
Production sample         Artwork Proof
                          Finished production packaging

5.2.2 Approval will be granted on design, quality and compliance with the Style Guide and the copyright lines and all designs must be consistent with the identity and image of the property.

5.2.3 Approval is not granted on the basis of any safety or fitness for purpose aspect of the Products as such aspects are the sole responsibility of the Licensee. The Licensee shall produce to the Licensor when requested all relevant safety certificates.

5.3 The Licensee shall ensure that all units of the Products including their wrappings and packaging are of the same description as the sample approved by the Licensor in accordance with Clause 5.2.


5.4 The Licensee shall supply to the Licensor the Number of Samples of the Products free of charge within three months of the first production of the Products.

5.5 If the Licensee employs a third party to manufacture the Products the Licensee shall:

5.5.1 put in place adequate controls to ensure that the manufacturer only manufactures the Product for the Licensee;

5.5.2 ensure that title to any plates or dies manufactured specially for production of the Products are the property of the Licensee and shall be returned to the Licensee by the manufacturer on demand;

5.5.3 only employ manufacturers after a full enquiry has been made to ensure that they are of proper status; and

5.5.4 ensure that any Products manufactured meet the Specifications.

5.6 If the Licensee or its third party manufacturer require imagery or artwork additional to the Style Guide, the Licensee agrees to pay the price quoted from time to time by the Licensor in respect thereof.

6. USE AND PROTECTION OF INTELLECTUAL PROPERTY

6.1 Every unit of the Products and all packaging, advertising and point of sale materials used in connection therewith and which incorporates the Intellectual Property shall bear the following statement which shall not be varied in any way by the Licensee without prior written consent of the Licensor:

"(C) 2002 W&P Shorrocks / Peak Entertainment Ltd" and any other equity partner

6.2 The Licensee shall not use any of the Property as part of the Licensee's name or the name of any entity associated with it without the prior written consent of the Licensor.

6.3 The Licensee shall not during the subsistence of this Agreement or at any time thereafter register or use any of the Intellectual Property in its own name as proprietor.

6.4 The Licensee recognises the Licensor's title to the Intellectual Property and shall not claim any right title or interest in the Intellectual Property or any part of it save as is granted by this Agreement. Any Intellectual Property right that the Licensee shall acquire to the Products is hereby


assigned to the Licensor and, if appropriate, the Licensee shall enter into a legal assignment of such Intellectual Property without payment.

6.5 The Licensee recognises that the copyright lines in any literary, artistic, musical or dramatic work generated or arising from the activities of the Licensee under this Agreement shall be the property of the Licensor and the Licensee with full title guarantee hereby assigns such copyright and all rights related thereto to the Licensor. If the Licensee requires or employs a third party to create any work in connection with this Agreement in respect of which copyright exists, the Licensee shall, prior to the third party creating the said work, obtain an assignment of such copyright and related rights in favour of the Licensor and the Licensee shall do all things necessary to ensure that the said copyright shall vest in the Licensor.

6.6 The Licensee shall promptly call to the attention of the Licensor the use of any part of the Property by any third party or any activity of any third party which might be in the opinion of the Licensee amount to infringement or passing off.

6.7 The Licensee shall not assign the benefit of this Agreement or grant any sub-licence without prior written consent of the Licensor.

6.8 The Licensee shall hold all goodwill generated by its operations under this Agreement as trustee for the benefit of the Licensor.

6.9 Any designs or other works derived by the Licensee from the Intellectual Property or any part of it shall be held by the Licensee on trust for the Licensor and at the Licensor's request shall be assigned to the Licensor without compensation.

6.10 The Licensee shall not, except with the prior written consent of the Licensor, make use of the name of the Licensor in any connection otherwise than is expressly permitted by this Agreement.

6.11 If required by the Licensor, the Licensee will join with the Licensor to become a registered user of the Intellectual Property or any part of it.

7. LICENSEE'S OBLIGATION AS TO MARKETING

7.1 The Licensee shall ensure that the Products shall be on sale to the trade within twelve months, and on sale to the public within fifteen months of the commencement date of the Term.

7.2 It is agreed by the Licensee that the Products will be sold only to recognised wholesale firms for resale to retail firms or to retail firms for resale to the public or direct to the public.


7.3 The Licensee shall ensure so far as it is reasonable practicable that the Products are not supplied for resale as an integral part of any other product and shall not be supplied either directly or indirectly to other manufacturers or to hawkers, peddlers, street vendors and the like or to any person intending to distribute the Products gratuitously.

7.4 The Licensee shall at all times use its best endeavours to promote and sell the Products in the Territory.

7.5 The Licensee shall only market and sell Products in an ethical manner having regard at all times to the image and reputation of the Property and shall therefore use good taste at all times.

7.6 The Licensee shall not harm, misuse or bring into disrepute the Property or the Licensor.

7.7 The Licensee shall distribute and sell the Products only through the Distribution Channels as specified in Clause1 of this Agreement.

8. NO PREMIUMS

8.1 The Licensee shall not sell or otherwise dispose of any of the Products as premiums to any person or persons whatsoever without the consent of the Licensor.

8.2 The right of sale as premiums is expressly reserved by the Licensor and if the Licensee shall receive any approach for the purpose of the use or sale of the products as premiums it shall forthwith notify the Licensor and furnish it with the names and full particulars of the person or persons making the approach.

8.3 For the purposes of this clause "premium" means a product or products combined with a service which is sold or supplied in association with the promotion of another product or service offered in association with the sales promotional activities of retailers wholesalers or manufacturers associations with incentive programmes of all kinds.

9. ACTION AGAINST THIRD PARTIES

9.1 The Licensee shall have the no right to take action against third parties in respect of the Intellectual Property and if required to do so by the Licensor the Licensee shall co-operate fully with the Licensor in any such action the Licensee's expenses incurred in doing so being borne by the Licensor.


9.2 All damages shall be the exclusive property of the Licensor provided that the Licensee shall be entitled to set-off any expenses which is able to claim from the Licensor pursuant to Clause 9.1.

9.3 Any decisions to take action against third parties shall be solely at the discretion of the Licensor.

10. TERMINATION

Without prejudice to any right or remedy the Licensor may have against the Licensee for breach or non-performance of this Agreement, the Licensor shall have the right to immediately terminate this Agreement by serving the Licensee with written notice to that effect in the following circumstances.

10.1 On the Licensee committing a breach of any provision of this Agreement and failing to remedy such breach within 30 days of receiving written notice specifying the breach and requiring remedy thereof;

10.2 if the Licensee shall have any distress or executor levied upon it's goods or effects;

10.3 on the Licensee becoming unable to pay its debts with the meaning of
Section 123 Insolvency Act 1986, passing any resolution to wind itself up or on petition being presented to wind up the Licensee or if a Receiver or an Administrative Receiver of the Licensee's undertaking, property or assets or any part thereof is appointed or if an application is made for the appointment of an Administrator of the Licensee, or if the Directors of the Licensee propose a composition of debts or scheme of arrangements.

10.4 on the Licensee for any reason whatever nature being substantially prevented from performing or becoming unable to perform its obligations under this Agreement.

10.5 on the Licensee assigning, sub-contracting or attempting to sub-contract or assign this Agreement without the prior written consent of the Licensor;

10.6 if control of the Licensee shall pass from the present shareholders or owned or controlled by other persons whom the Licensor shall in it's absolute discretion regard as unsuitable;

10.7 if the Licensee ceases or threatens to cease carrying on it's usual business for a period in excess of thirty (30) working days consecutively.

11. TERMINATION CONSEQUENCES


11.1 Upon termination of this Agreement whether by expiry of the Term or otherwise the Licensee shall forthwith discontinue manufacture of the Products.

11.2 If the Licensee shall have any remaining stocks of the Products at the time of termination they may be disposed of by the Licensee in compliance with the terms of this Agreement for three months after termination but not otherwise.

11.3 Any Products in the course of manufacture at the time of termination may be completed within 14 days and disposed of in compliance with Clause 11.2 of this Agreement but not otherwise.

11.4 The Licensee shall forthwith upon termination pay to the Licensor the Guaranteed Royalty to the extent not paid earlier through any combination of the Advance or royalties earned prior to termination.

12. LICENSORS WARRANTY

Licensor represents and warrants to the Licensee that:

12.1 It has and will have throughout the Term of this Agreement, the right to exploit the Property in all media throughout the Territory.

12.2 The rights granted herein do not, so far as the Licensor is aware, violate or infringe any agreements, rights or obligations existing, or to be created during the Term, of any person, firm or corporation.

13. INDEMNITY

13.1 The Licensee shall indemnify and hold harmless the Licensor from and against any liability, loss, claim or proceedings whatsoever arising under any statute or at Common Law in respect of personal injury to or the death of any person and any injury or damage to any property real or personal arising from the sale of the Products unless such liability arises from the neglect or default of the Licensor.

13.2 The Licensee shall have in force Public and Product Liability Insurance for not less than the equivalent of 1 million satisfactory to the Licensor and with the Licensor as additional named insured.

13.3 The policies of insurance shall be shown to the Licensor whenever it requests together with satisfactory evidence of payment of premiums.

14. INSPECTION


The Licensee shall permit the Licensor at all reasonable times to inspect the Licensee's premises in order to satisfy itself that the Licensee is complying with its obligations under this Agreement.

15. MISCELLANEOUS

15.1 No Waiver

No waiver by the Licensor of any of the Licensee's obligations under this Agreement shall be deemed effective unless made by the Licensor in writing nor shall any waiver by the Licensor in respect of any breach be deemed to constitute waiver of or consent to any subsequent breach by the Licensee of it's obligations.

15.2 Severance

In the event that any provision of this Agreement is declared by any judicial proceedings or other competent authority to be void, voidable or illegal the remaining provisions shall continue to apply unless the Licensor at the Licensor's discretion decides that the effect is to defeat the original intentions of the Parties in which case it shall be entitled to terminate the Agreement by 30 days notice in which event the provisions of Clause 11 shall apply.

15.3 No Agency or Partnership

The Parties are not partners nor joint venturers nor is the Licensee entitled to act as the Licensor's agent nor shall the Licensor be liable in respect of any representation act or omission of the Licensee whatever nature.

15.4 Notices

Any Notice to be served on either of the Parties by the other shall be sent by pre-paid recorded delivery or registered post or by facsimile to the address stated in Clause 1 and shall be deemed to have been received by the addressee with (three) 3 working days after posting or 24 hours of transmission if sent by facsimile.

15.5 Choice of Law

This Agreement shall be governed by English law in every particular including formation and interpretation and shall subject to the jurisdiction of the English Courts.

16. TRANSMISSION OF BENEFIT

16.1 This Agreement shall be binding upon and inure to the benefit of the Licensor and its successors and assigns.


16.2 The Licensee may not assign or sub-licence the rights contained in this Agreement.

17. INTEREST

If any sums due hereunder remain unpaid for a period in excess of 14 days after they have become due to the Licensor the unpaid balance will accrue interest at the rate of 4% per annum above the base rate for the time being of Lloyds TSB Bank Plc.

18. FORCE MAJEURE

If the performance of this Agreement is prevented, restricted or interfered with by reason of circumstances beyond the reasonable control of the party obliged to perform it the party so affected upon giving proper notice to the other party shall be excused from performance to the extent of prevention, restriction or interference but the party so affected shall use its best efforts to avoid or remove such causes of non-performance and shall continue performance under the Agreement with the utmost despatch whenever such causes are removed or diminished.

19. HEADINGS

The headings of conditions are for convenience of reference only and shall not affect their interpretation.

20. ENTIRE UNDERSTANDING AND VARIATION

20.1 This Agreement embodies the entire understanding of the parties in respect of the matters contained or referred to in it and there are no promises, conditions or obligations oral or written, expressed or implied other than those contained in this Agreement.

20.2 No variation or amendment of this Agreement or oral promise or commitment related to it shall be valid unless committed to writing and signed by a director of the Owner.

21. THE CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

This Agreement does not create any right enforceable by any person nor a party to it provided that a person who is the permitted assignee or a successor to the Licensor is deemed to be a party to this Agreement.


THE FIRST SCHEDULE

SPECIFICATIONS

The Product shall be manufactured to a standard no lower than the sample provided by the Licensee to the Licensor in accordance with Clause 5.2.

The material used in the manufacturing the Product shall be of no lower quality than that used in the sample.

The colour and depiction of the material shall be as specified in the Style Guide.


SIGNED BY

FOR AND ON BEHALF OF THE LICENSOR

SIGNED BY /s/                                           30/8/05

FOR AND ON BEHALF OF THE LICENSEE


EXHIBIT 10.7

LICENCE AGREEMENT NUMBER MTM007

SUMMARY OF TERMS

The Licensee: Name: Fun2Learn Ltd Address: Holt House Matlock , Derbyshire

DE4 3LY

                                        Contact:  Ashley Heron
                                            tel:  01629 760388
                                            fax:
                                         e-mail:  Fun2learngroup@aol.com

The Property:                        Muffin The Mule

The Principal:                       Maverick Entertainment and SMPL

The Licensor:                        Peak Entertainment Ltd

The Products:                        Childrens coin operated ride

Channels of Distribution:            All

The Territory:                       United Kingdom

The Term:                             1st September 05 to 31st Dec 07

Advance Royalty:                     (pound)1,000 + Vat on signature

Guaranteed Royalty:                  (pound)2000 + Vat (includes the above
                                     advance) paid quarterly over the Term.

Royalty Rate:                        Fixed Fee of (pound)100 per unit


Number of Samples:                   1 of each product MUST BE SUPPLIED


This LICENCE AGREEMENT is made this 1st day of September 2005 between:

THE PARTIES:

1. PEAK ENTERTAINMENT LTD, Bagshaw Hall, Bakewell, Derbyshire, DE45 1DL ("the Licensor")

2. THE LICENSEE: whose full name and trading or registered address is referred to on the Summary of Terms Sheet ("the Licensee")

RECITALS

(A) The Licensor controls all rights of exploitation in the Property.

(B) The Licensee wished to obtain a licence to manufacture, market, sell and distribute the Products incorporating the Property and the Licensor has agreed to grant such right.

1. DEFINITIONS

"The Intellectual Property" - means copyright, trade mark and other rights in the Property.

"Nett Selling Price" - means the gross price at which the Licensee sells the Product in an arms length transaction less only Value Added Tax and normal trade discounts.

"Notice" - means notice in writing served in accordance with the provisions of sub-clause 15.4.

"The Royalties" - means the payments to be made to the Licensor by the Licensee under Clause 4.

"The Specifications" - means the specifications set out in the first schedule.

"The Style Guide" - means the documents provided by the Licensor to the Licensee from time to time giving details of the Property including the papers that have been given to the Licensee before the signing of this Agreement.

"Channels of Distribution" - means all channels of distribution

The words referred to in the first column of the Summary of Terms shall have the meanings attributed to them in the second column of the Summary of Terms Sheet.


2. GRANT

2.1 In consideration of the obligations undertaken by the Licensee under this Agreement the Licensor grants to the Licensee an exclusive licence to apply the Property to the manufacture, marketing, distribution and sale of the Products in the Territory in accordance with the Specifications and the Style Guide and under the terms of this Agreement in the Territory.

2.2 The Licensee shall only market and solicit orders for the Products in the Territory. If it receives orders for the supply of Products outside the Territory it will immediately inform the Licensor thereof.

2.3 The Licensor reserves the right to remove any of the Products listed in the Summary of Terms where they are not on sale to the trade in accordance with Clause 7.1 in any part of the Territory.

2.4 The Licensor reserves all rights not specifically granted herein including the right to grant licences of the Property to other licensees in the Territory in respect of other product categories.

2.5 The Licensor also reserves the right to request any third party to manufacture the Products for promotional purposes.

3. TERM

This Agreement shall be for the Term unless terminated earlier in accordance with Clause 9 herein.

4. ROYALTIES

4.1 In consideration of the rights granted by the Licensor the Licensee shall pay to the Licensor a royalty of the Agreed Percentage of the Net Selling Price of each unit of the Products sold by the Licensee (less only normal trade discounts).

4.2 The Licensee shall within 30 days of the 30th March, 30th June, 30th September and 30th December in each year deliver to the Licensor a statement giving particulars of all sales of the Products effected by the Licensee since the last statement date (and in respect of the first statement; since the date of this Agreement) and showing the total royalty payable to the Licensor and at the same time deliver to the Licensor a remittance for the greater of the full amount of that royalty or an equal quarterly installment of the Guaranteed Royalty (less only the pro rata Advance applicable for the relevant quarter). The form of the statement is set out in the second Schedule.


4.3 The Licensee shall keep and maintain separate and detailed accurate accounts and records so as to show the quantity and Net Selling Price of Products sold, used or otherwise disposed of by the Licensee for each royalty period giving separately the figures for each product. The Licensor shall have the right at reasonable hours, and on giving the Licensee reasonable notice, to appoint a representative (being a qualified, certified or chartered accountant) to audit the said accounts and records and if such audit reveals a discrepancy it shall be collected forthwith. It is further agreed that if such discrepancy is 5% or more in the Licensee's favour, the Licensee shall within 14 days of the date of the relevant invoice pay the Licensor's reasonable auditing fees and expenses in addition to any other payments due and interest on the discrepancy at 4% above the base lending rate from time to time of National Westminster Bank Plc.

4.4 All sums payable by the Licensee to any person pursuant to this Agreement shall be paid free and clear of all deductions (except normal trade discounts) or withholdings whatsoever, save only as may be required by any applicable law.

5. SPECIFICATION AND QUALITY

5.1 The Licensee shall manufacture the Products according to the Specifications and the Style Guide or such other specifications as the Licensor may from time to time substitute and at all times ensure that the Products are of the highest quality attainable within the Specifications, in particular the Licensee is to ensure that the Products comply in all respects with the provisions of the relevant Toy Safety Regulations (where applicable) and all other relevant statutes, regulations and codes of practice in respect of safety and quality.

5.2 The Licensee shall submit for the Licensor's written approval samples of the Products, any articles to be sold with the Products and all packaging material, display, advertising or publicity material and shall refrain from distribution, sales or publication of any of the Products until such approval shall have been first had and obtained. The Licensor reserves the right to require the Licensee to make any alterations that the Licensor may require to such items.

5.2.1 The Licensee shall comply with this Clause 5.2 at each and every stage of development of the Products identified as follows:

PRODUCT PACKAGING


Rough visual of concept   Rough visual of concept
Hand/Sample/Prototype     Rough artwork
Pre-production sample     Finished artwork
Production sample         Artwork Proof
                          Finished production packaging

5.2.2 Approval will be granted on design, quality and compliance with the Style Guide and the copyright lines and all designs must be consistent with the identity and image of the property.

5.2.3 Approval is not granted on the basis of any safety or fitness for purpose aspect of the Products as such aspects are the sole responsibility of the Licensee. The Licensee shall produce to the Licensor when requested all relevant safety certificates.

5.3 The Licensee shall ensure that all units of the Products including their wrappings and packaging are of the same description as the sample approved by the Licensor in accordance with Clause 5.2.

5.4 The Licensee shall supply to the Licensor the Number of Samples of the Products free of charge within three months of the first production of the Products.

5.5 If the Licensee employs a third party to manufacture the Products the Licensee shall:

5.5.1 put in place adequate controls to ensure that the manufacturer only manufactures the Product for the Licensee;

5.5.2 ensure that title to any plates or dies manufactured specially for production of the Products are the property of the Licensee and shall be returned to the Licensee by the manufacturer on demand;

5.5.3 only employ manufacturers after a full enquiry has been made to ensure that they are of proper status; and

5.5.4 ensure that any Products manufactured meet the Specifications.

5.6 If the Licensee or its third party manufacturer require imagery or artwork additional to the Style Guide, the Licensee agrees to pay the price quoted from time to time by the Licensor in respect thereof.

6. USE AND PROTECTION OF INTELLECTUAL PROPERTY


6.1 Every unit of the Products and all packaging, advertising and point of sale materials used in connection therewith and which incorporates the Intellectual Property shall bear the following statement which shall not be varied in any way by the Licensee without prior written consent of the Licensor:

"(C) 2005 Maverick Entertainment and SMPL . Licensed by Peak Entertainment Ltd."

6.2 The Licensee shall not use any of the Property as part of the Licensee's name or the name of any entity associated with it without the prior written consent of the Licensor.

6.3 The Licensee shall not during the subsistence of this Agreement or at any time thereafter register or use any of the Intellectual Property in its own name as proprietor.

6.4 The Licensee recognises the Licensor's title to the Intellectual Property and shall not claim any right title or interest in the Intellectual Property or any part of it save as is granted by this Agreement. Any Intellectual Property right that the Licensee shall acquire to the Products is hereby assigned to the Licensor and, if appropriate, the Licensee shall enter into a legal assignment of such Intellectual Property without payment.

6.5 The Licensee recognizes that the copyright lines in any literary, artistic, musical or dramatic work generated or arising from the activities of the Licensee under this Agreement shall be the property of the Licensor and the Licensee with full title guarantee hereby assigns such copyright and all rights related thereto to the Licensor. If the Licensee requires or employs a third party to create any work in connection with this Agreement in respect of which copyright exists, the Licensee shall, prior to the third party creating the said work, obtain an assignment of such copyright and related rights in favour of the Licensor and the Licensee shall do all things necessary to ensure that the said copyright shall vest in the Licensor.

6.6 The Licensee shall promptly call to the attention of the Licensor the use of any part of the Property by any third party or any activity of any third party which might be in the opinion of the Licensee amount to infringement or passing off.

6.7 The Licensee shall not assign the benefit of this Agreement or grant any sub-licence without prior written consent of the Licensor.


6.8 The Licensee shall hold all goodwill generated by its operations under this Agreement as trustee for the benefit of the Licensor.

6.9 Any designs or other works derived by the Licensee from the Intellectual Property or any part of it shall be held by the Licensee on trust for the Licensor and at the Licensor's request shall be assigned to the Licensor without compensation.

6.10 The Licensee shall not, except with the prior written consent of the Licensor, make use of the name of the Licensor in any connection otherwise than is expressly permitted by this Agreement.

6.11 If required by the Licensor, the Licensee will join with the Licensor to become a registered user of the Intellectual Property or any part of it.

7. LICENSEE'S OBLIGATION AS TO MARKETING

7.1 The Licensee shall ensure that the Products shall be on sale to the trade within twelve months, and on sale to the public within fifteen months of the commencement date of the Term.

7.2 It is agreed by the Licensee that the Products will be sold only to recognised wholesale firms for resale to retail firms or to retail firms for resale to the public or direct to the public.

7.3 The Licensee shall ensure so far as it is reasonable practicable that the Products are not supplied for resale as an integral part of any other product and shall not be supplied either directly or indirectly to other manufacturers or to hawkers, peddlers, street vendors and the like or to any person intending to distribute the Products gratuitously.

7.4 The Licensee shall at all times use its best endeavors to promote and sell the Products in the Territory.

7.5 The Licensee shall only market and sell Products in an ethical manner having regard at all times to the image and reputation of the Property and shall therefore use good taste at all times.

7.6 The Licensee shall not harm, misuse or bring into disrepute the Property or the Licensor.


7.7 The Licensee shall distribute and sell the Products only through the Distribution Channels as specified in Clause 1 of this Agreement.

8. ACTION AGAINST THIRD PARTIES

8.1 The Licensee shall have the no right to take action against third parties in respect of the Intellectual Property and if required to do so by the Licensor the Licensee shall co-operate fully with the Licensor in any such action the Licensee's expenses incurred in doing so being borne by the Licensor.

8.2 All damages shall be the exclusive property of the Licensor provided that the Licensee shall be entitled to set-off any expenses which is able to claim from the Licensor pursuant to Clause 8.1.

8.3 Any decisions to take action against third parties shall be solely at the discretion of the Licensor.

9. TERMINATION

Without prejudice to any right or remedy the Licensor may have against the Licensee for breach or non-performance of this Agreement, the Licensor shall have the right to immediately terminate this Agreement by serving the Licensee with written notice to that effect in the following circumstances.

9.1 On the Licensee committing a breach of any provision of this Agreement and failing to remedy such breach within 30 days of receiving written notice specifying the breach and requiring remedy thereof;

9.2 if the Licensee shall have any distress or executor levied upon it's goods or effects;

9.3 on the Licensee becoming unable to pay its debts with the meaning of
Section 123 Insolvency Act 1986, passing any resolution to wind itself up or on petition being presented to wind up the Licensee or if a Receiver or an Administrative Receiver of the Licensee's undertaking, property or assets or any part thereof is appointed or if an application is made for the appointment of an Administrator of the Licensee, or if the Directors of the Licensee propose a composition of debts or scheme of arrangements.

9.4 on the Licensee for any reason whatever nature being substantially prevented from performing or becoming unable to perform its obligations under this Agreement.


9.5 on the Licensee assigning, sub-contracting or attempting to sub-contract or assign this Agreement without the prior written consent of the Licensor;

9.6 if control of the Licensee shall pass from the present shareholders or owned or controlled by other persons whom the Licensor shall in it's absolute discretion regard as unsuitable;

9.7 if the Licensee ceases or threatens to cease carrying on it's usual business for a period in excess of thirty (30) working days consecutively.

10. TERMINATION CONSEQUENCES

10.1 Upon termination of this Agreement whether by expiry of the Term or otherwise the Licensee shall forthwith discontinue manufacture of the Products.

10.2 If the Licensee shall have any remaining stocks of the Products at the time of termination they may be disposed of by the Licensee in compliance with the terms of this Agreement for three months after termination but not otherwise.

10.3 Any Products in the course of manufacture at the time of termination may be completed within 14 days and disposed of in compliance with Clause 10.2 of this Agreement but not otherwise.

11. LICENSORS WARRANTY

Licensor represents and warrants to the Licensee that:

11.1 It has and will have throughout the Term of this Agreement, the right to exploit the Property in all media throughout the Territory.

11.2 The rights granted herein do not, so far as the Licensor is aware, violate or infringe any agreements, rights or obligations existing, or to be created during the Term, of any person, firm or corporation.

12. INDEMNITY

12.1 The Licensee shall indemnify and hold harmless the Licensor from and against any liability, loss, claim or proceedings whatsoever arising under any statute or at Common Law in respect of personal injury to or the death of any person and any injury or damage to any property real or personal arising from the sale of the Products unless such liability arises from the neglect or default of the Licensor.


12.2 The Licensee shall have in force Public and Product Liability Insurance for not less than the equivalent of 1 million satisfactory to the Licensor and with the Licensor as additional named insured.

12.3 The policies of insurance shall be shown to the Licensor whenever it requests together with satisfactory evidence of payment of premiums.

13. INSPECTION

The Licensee shall permit the Licensor at all reasonable times to inspect the Licensee's premises in order to satisfy itself that the Licensee is complying with its obligations under this Agreement.

14. MISCELLANEOUS

14.1 No Waiver

No waiver by the Licensor of any of the Licensee's obligations under this Agreement shall be deemed effective unless made by the Licensor in writing nor shall any waiver by the Licensor in respect of any breach be deemed to constitute waiver of or consent to any subsequent breach by the Licensee of it's obligations.

14.2 Severance

In the event that any provision of this Agreement is declared by any judicial proceedings or other competent authority to be void, voidable or illegal the remaining provisions shall continue to apply unless the Licensor at the Licensor's discretion decides that the effect is to defeat the original intentions of the Parties in which case it shall be entitled to terminate the Agreement by 30 days notice in which event the provisions of Clause 10 shall apply.

14.3 No Agency or Partnership

The Parties are not partners nor joint venturers nor is the Licensee entitled to act as the Licensor's agent nor shall the Licensor be liable in respect of any representation act or omission of the Licensee whatever nature.

14.4 Notices

Any Notice to be served on either of the Parties by the other shall be sent by pre-paid recorded delivery or registered post or by facsimile to the address stated in Clause 1 and shall be deemed to have been received by the addressee with (three) 3 working days after posting or 24 hours of transmission if sent by facsimile.


14.5 Choice of Law

This Agreement shall be governed by English law in every particular including formation and interpretation and shall subject to the jurisdiction of the English Courts.

15. TRANSMISSION OF BENEFIT

15.1 This Agreement shall be binding upon and inure to the benefit of the Licensor and its successors and assigns.

15.2 The Licensee may not assign or sub-licence the rights contained in this Agreement.

16. INTEREST

If any sums due hereunder remain unpaid for a period in excess of 14 days after they have become due to the Licensor the unpaid balance will accrue interest at the rate of 4% per annum above the base rate for the time being of Barclays Bank Plc.

17. FORCE MAJEURE

If the performance of this Agreement is prevented, restricted or interfered with by reason of circumstances beyond the reasonable control of the party obliged to perform it the party so affected upon giving proper notice to the other party shall be excused from performance to the extent of prevention, restriction or interference but the party so affected shall use its best efforts to avoid or remove such causes of non-performance and shall continue performance under the Agreement with the utmost dispatch whenever such causes are removed or diminished.

18. HEADINGS

The headings of conditions are for convenience of reference only and shall not affect their interpretation.

19. ENTIRE UNDERSTANDING AND VARIATION

19.1 This Agreement embodies the entire understanding of the parties in respect of the matters contained or referred to in it and there are no promises, conditions or obligations oral or written, expressed or implied other than those contained in this Agreement.

19.2 No variation or amendment of this Agreement or oral promise or commitment related to it shall be valid unless committed to writing and signed by a director of the Owner.


20. THE CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

This Agreement does not create any right enforceable by any person nor a party to it provided that a person who is the permitted assignee or a successor to the Licensor is deemed to be a party to this Agreement.

SPECIFICATIONS

The Product shall be manufactured to a standard no lower than the sample provided by the Licensee to the Licensor in accordance with Clause 5.2.

The material used in the manufacturing the Product shall be of no lower quality than that used in the sample.

The colour and depiction of the material shall be as specified in the Style Guide

SIGNED BY /s/ Alan Shorrocks                       21/10/05

FOR AND ON BEHALF OF THE LICENSOR




SIGNED BY /s/ A. Heron    (A. HERON)

FOR AND ON BEHALF OF THE LICENSEE


SECOND SCHEDULE

PEAK ENTERTAINMENT LTD

FROM:

DATE:
ROYALTY PERIOD:
PROPERTY:
TERRITORY:

---------------- ---------------- ----------------- --------------- ------------------- -------------- ---------------- ------------
     PRODUCT        PIECES SOLD     TOTAL GROSS      TOTAL GROSS          TOTAL           ROYALTY %      LESS ADVANCES      TOTAL
   DESCRIPTION     DURING PERIOD    SALES VALUE       SALES VALUE      GROSS SALES                        NOT CLAIMED      PAYABLE
                                     AT START OF       AT END OF     VALUE FOR PERIOD
                                       PERIOD           PERIOD
---------------- ---------------- ----------------- --------------- ------------------- -------------- ---------------- ------------
---------------- ---------------- ----------------- --------------- ------------------- -------------- ---------------- ------------

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

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

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

---------------- ---------------- ----------------- --------------- ------------------- -------------- ---------------- ------------
                                                                                                         PLUS VAT
                                                                                                       ---------------- ------------
                                                                                                         TOTAL
                                                                                                       ---------------- ------------

Signed
(Licensee)

Please complete in capital letters and return to:
Peak Entertainment Ltd
Bagshaw Hall, Bagshaw Hill, Bakewell, Derbyshire, DE45 1DL


EXHIBIT 10.8

CONSULTANT AGREEMENT

This Agreement is made and entered into as of the 10th day of October, 2005 between Peak Entertainment Holdings, Inc. and CEOcast, Inc. (the "Consultant")

In consideration of and for the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1. Purpose. The Company hereby employs the Consultant during the Term (as defined below) to render Investor Relations services to the Company, upon the terms and conditions as set forth herein.

2. Term. This Agreement shall be effective for a six-month period (the "Term") commencing on the date hereof.

3. Duties of Consultant. During the term of this Agreement, the Consultant shall provide to the Company those services outlined in Exhibit A. Notwithstanding the foregoing, it is understood and acknowledged by the parties that the Consultant: (a) shall perform its analysis and reach its conclusions about the Company independently, and that the Company shall have no involvement therein; and (b) shall not render advice and/or services to the Company in any manner, directly or indirectly, that is in connection with the offer or sale of securities in a capital raising transaction or that could result in market making.

4. Expenses. The Company, upon receipt of appropriate supporting documentation, shall reimburse the Consultant for any and all reasonable out-of-pocket expenses incurred by it in connection with services requested by the Company, including, but not limited to, all charges for travel, printing costs and other expenses spent on the Company's behalf. The Company shall immediately pay such expenses upon the presentation of invoices. Consultant shall not incur more than $500 in expenses without the express consent of the Company.

5. Compensation. For services to be rendered by the Consultant hereunder, the Consultant shall receive from the Company upon the signing of the Agreement: (a) 200,000 shares of fully-paid, non-assessable common stock (the "Common Stock") as the Retainer, which shall represent the stock component under the Agreement. The Common Stock shall be issued to Consultant or its designee. Company agrees to register the Common Stock, at Company's expense, in connection with the next registration of its securities. In addition, the Company shall pay Consultant $7,500 per month on or before the 10th day of January, February and March, 2006, plus expenses outlined in Section 4. Company also agrees to provide Consultant with an opinion, at Company's expense, permitting Consultant or its designee to sell its Common Stock under Rule 144 after one year, provided Rule 144 is applicable. Company also agrees to issue Consultant 182,000 shares of Common Stock, upon the signing of this Agreement, to cover the outstanding past due balance under a previous agreement. Such shares shall contain the same registration provisions as the Common Stock under this Agreement.

6. Further Agreements. Because of the nature of the services being provided by Consultant hereunder, Consultant acknowledges that if it may receive access to Confidential Information (as defined in Section 6 hereof ) and that, as a consultant to the Company, it will attempt to provide advice that serves the best interest of the Company. Because of the uniqueness of this relationship, the Consultant covenants and agrees that, with respect to the Common Stock that it receives. Consultant shall, at all times that it is the beneficial owner of such shares, vote such shares on all matters coming before it as a stockholder of the Company in the same manner as the majority of the Board of Directors of the Company shall recommend.


7. Confidentiality. Consultant acknowledges that as a consequence of its relationship with the Company, it may be given access to confidential information which may include the following types of information; financial statements and related financial information with respect to the Company and its subsidiaries (the "Confidential Financial Information"), trade secrets, products, product development, product packaging, future marketing materials, business plans, certain methods of operations, procedures, improvements, systems, customer lists, supplier lists and specifications, and other private and confidential materials concerning the Company's business (collectively, "Confidential Information").

Consultant covenants and agrees to hold such Confidential Information strictly confidential and shall only use such information solely to perform its duties under this Agreement, and Consultant shall refrain from allowing such information to be used in any way for its own private or commercial purposes. Consultant shall also refrain from disclosing any such Confidential Information to any third parties. Consultant further agrees that upon termination or expiration of this Agreement, it will return all Confidential Information and copies thereof to the Company and will destroy all notes, reports and other material prepared by or for it containing Confidential Information. Consultant understands and agrees that the Company might be irreparably harmed by violation of this Agreement and that monetary damages may be inadequate to compensate the Company. Accordingly, the Consultant agrees that, in addition to any other remedies available to it at law or in equity, the Company shall be entitled to injunctive relief to enforce the terms of this Agreement.

Notwithstanding the foregoing, nothing herein shall be construed as prohibiting Consultant from disclosing any Confidential Information (a) which at the time of disclosure. Consultant can demonstrate either was in the public domain and generally available to the public or thereafter becomes a part of the public domain and is generally available to the public by publication or otherwise through no act of the Consultant; (b) which Consultant can establish was independently developed by a third party who developed it without the use of the Confidential Information and who did not acquire it directly or indirectly from Consultant under an obligation of confidence; (c) which Consultant can show was received by it after the termination of this Agreement from a third party who did not acquire it directly or indirectly from the Company under an obligation of confidence; or (d) to the extent that the Consultant can reasonably demonstrate such disclosure is required by law or in any legal proceeding, governmental investigation, or other similar proceeding.

Severability. If any provision of this Agreement shall be held or made invalid by a statute, rule, regulation, decision of a tribunal or otherwise, the remainder of this Agreement shall not be affected thereby and, to this extent, the provisions of this Agreement shall be deemed to be severable.

8. Governing Law; Venue; Jurisdiction. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to principles of conflicts or choice of law thereof. Each of the parties consents to the jurisdiction of the U.S. District Court in the Southern District of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens. to the bringing of any such proceeding in such jurisdictions. Each party hereby agrees that if another party to this Agreement obtains a judgment against it in such a proceeding, the party which obtained such judgment may enforce same by summary judgment in the courts of any country having jurisdiction over the party against whom such judgment was obtained, and each party hereby waives any defenses available to it under local law and agrees to the enforcement of such a judgment. Each party to this Agreement irrevocably consents to the service of process in any such proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at it address set forth herein. Nothing herein shall affect the right of


any party to serve process in any other manner permitted by law. Each party waives its right to a trial by jury.

9. Miscellaneous.

(a) Any notice or other communication between parties hereto shall be sufficiently given if sent by certified or registered mail, postage prepaid, if to the Company, addressed to it at Bagshaw Hills, Bakewell, Derbyshire, UK or if to the Consultant, addressed to it at CEOcast, Inc., 369 Lexington Avenue, New York, NY 10017 Attention: Administrator, facsimile number: (212) 732-1131, or to such address as may hereafter be designated in writing by one party to the other. Any notice or other communication hereunder shall be deemed given three days after deposit in the mail if mailed by certified mail, return receipt requested, or on the day after deposit with an overnight courier service for next day delivery, or on the date delivered by hand or by facsimile with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated above (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received).

(b) This Agreement embodies the entire Agreement and understanding between the Company and the Consultant and supersedes any and all negotiations, prior discussions and preliminary and prior arrangements and understandings related to the central subject matter hereof.

(c) This Agreement has been duly authorized, executed and delivered by and on behalf of the Company and the Consultant.

(d) This Agreement and all rights, liabilities and obligations hereunder shall be binding upon and inure to the benefit of each party's successors but may not be assigned without the prior written approval of the other party.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date hereof.

PEAK ENTERTAINMENT HOLDINGS INC.

By:  /s/ Wilf Shorrocks
     ------------------

CEOCAST, INC.

                                                By:  /s/
                                                     ------------------

1. Interviews on ceocast.com that will be distributed to over 275,000 opt-in
entertainment investors registered on the CEOcast Internet site.
2. Company featured on the Home Page of CEOcast Internet site for one week each
quarter.
3. The writing and distribution of press releases to over 275,000 opt-in
entertainment investors.
4. Company covered in CEOcast weekly newsletter.
5. Calls to 100 brokers on each news release. These brokers can buy small-cap
securities in particular.
6. Meetings with small-cap brokerage firms and brokers to develop support for
the company's stock.
7. Dedicated investor line to handle call volume.
8. Strategic advice and other customary IR services.
9. Meetings with micro-cap institutional investors.


EXHIBIT 31.1

CERTIFICATION

I, Wilfred Shorrocks, certify that:

1. I have reviewed this report on Form 10-QSB for the quarterly period ended September 30, 2005 of Peak Entertainment Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [omitted];

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 21, 2005

                                               /s/ Wilfred Shorrocks
                                               --------------------------
                                               Wilfred Shorrocks
                                               Chief Executive Officer


EXHIBIT 31.2

CERTIFICATION

I, Nicola Yeomans, certify that:

1. I have reviewed this report on Form 10-QSB for the quarterly period ended September 30, 2005 of Peak Entertainment Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [omitted];

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 21, 2005

                                            /s/ Nicola Yeomans
                                            -----------------------------
                                            Nicola Yeomans
                                            Principal Financial Officer


EXHIBIT 32.1

CERTIFICATION
PURSUANT TO SECTION 13a-14(b) OF THE SECURITIES EXCHANGE ACT OF 1934
AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Peak Entertainment Holdings, Inc. (the "Company") on Form 10-QSB for the quarterly period ended September 30, 2005, as filed with the Securities and Exchange Commission on the date therein specified (the "Report"), the undersigned, Wilfred Shorrocks, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Wilfred Shorrocks
----------------------------
Wilfred Shorrocks
Chief Executive Officer
Date: November 21, 2005


EXHIBIT 32.2

CERTIFICATION
PURSUANT TO SECTION 13a-14(b) OF THE SECURITIES EXCHANGE ACT OF 1934
AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Peak Entertainment Holdings, Inc. (the "Company") on Form 10-QSB for the quarterly period ended September 30, 2005, as filed with the Securities and Exchange Commission on the date therein specified (the "Report"), the undersigned, Nicola Yeomans, as Principal Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C.
Section 1350, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Nicola Yeomans
-----------------------------
Nicola Yeomans
Principal Financial Officer
Date: November 21, 2005