Exhibit
      10.7

    
 

    ADDENDUM
      TO SECURITY AGREEMENT

    


    THIS
      ADDENDUM TO SECURITY AGREEMENT (the
      “Addendum”), is
      entered into and made effective as of August ___, 2005, by and between
CLAYTON,
      DUNNING GROUP, INC., a
      Florida
      corporation (the “Company”),
      and
      the BUYER
      listed
      on Schedule I attached to the Securities Purchase Agreement dated December
      22,
      2004 (the “Secured
      Party”)
      and
      amends the Security Agreement dated December 22, 2004 between the Company and
      the Secured Party (the “Security
      Agreement”).
      

     

    WHEREAS,
      on
      December 22, 2004 the parties hereto entered into the Security Agreement
      pursuant to which the Company granted to the Secured Party a security interest
      in and to the Pledged Property to secure the satisfaction of the Obligations
      of
      the Company to the Secured Party, which security interest shall remain in
      effect;

     

    WHEREAS,
      in July
      2005, Phelps Engineered Plastics Corp., a Nevada corporation (“Phelps”)
      acquired all the capital stock of the Company. Subsequent to the acquisition,
      Phelps changed its name to Clayton Dunning Group, Inc. (“Clayton
      Dunning”)
      and
      the Company became a wholly owned subsidiary of Clayton Dunning. On the date
      hereof, Clayton Dunning entered into an assignment agreement (“Assignment
      Agreement”)
      pursuant to which it assumed all the rights and obligations of the Company
      pursuant to the Transaction Documents.

    


    WHEREAS,
      as
      a
      result of the
      assignment by the Company pursuant to the Assignment Agreement part of the
      Obligations secured by the Security Agreement were assigned and assumed by
      Clayton Dunning, and the Company and the Secured Party entered into a Guaranty
      Agreement, dated as of the date hereof (the “Guaranty
      Agreement”)
      pursuant to which the Company shall Guaranty Clayton Dunning’s satisfaction of
      such assigned Obligations in accordance with the Guaranty
      Agreement;

     

    WHEREAS,
      the
      parties are entering into this Addendum Agreement to reflect the assignment
      of
      part of the Obligations to Clayton Dunning and the Company’s Guaranty of Clayton
      Dunning’s the repayment of the amounts owed under the Convertible Debentures to
      the Secured Party; and 

     

    WHEREAS,
      to
      induce
      the Secured Party to consent to the Assignment Agreement and enter into all
      ancillary agreements and documents, the Company and the Secured Party hereby
      amend this Security Agreement to reflect the change in the Obligations.


     

    NOW,
      THEREFORE, in
      consideration of the premises and the mutual covenants herein contained, and
      for
      other good and valuable consideration, the adequacy and receipt of which are
      hereby acknowledged, the parties hereto hereby agree to amend the Security
      Agreement as follows:

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	1.  	
              Amendment
                to Section 1.3.
                Section 1.3 shall be deleted in its entirety and replaced with the
                following:

            


    

    


    The
      obligations secured hereby are any and all obligations of the Company now
      existing or hereinafter incurred to the Secured Party, whether oral or written
      and whether arising before, on, or after the date hereof including, without
      limitation, those obligations of the Company to the Secured Party under the
      Guaranty Agreement (collectively, the “Obligations”).

    


    
      	2.  	
              Reaffirmation
                of Security Interest.
                The Company reaffirms its grant to the Secured Party of a security
                interest in and to the Pledged Property until the satisfaction of
                the
                Obligations, as amended herein.

            


    

     

     

    SIGNATURE
      PAGE TO FOLLOW

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the
      parties hereto have executed this Addendum to Security Agreement as of the
      date
      first above written.

     

     

    
      
        
          
            	 	 	
                    
                      
                        
                          COMPANY:

                        

                      

                    

                  
	 	 	
                    
                      Clayton,
                        Dunning and Comapny, Inc.

                    

                  
	 	 	 
	 	 	By: 
	
                  	 	
                    

                    
                      
                        
                          Name: Robert
                            C. Lau

                        

                      

                    

                  
	 	 	
                    
                      
                        Title: Chief
                          Executive Officer

                      

                    

                  


          

           

           

        

      

      
        
          
            
              	 	 	
                      
                        
                          
                            
                              SECURED
                                PARTY:

                            

                          

                        

                      

                    
	 	 	
                      
                        
                          Cornell
                            Capital Partners, LP

                        

                      

                    
	 	 	 
	 	 	
                      
                        By: Yorkville
                          Advisors, LLC

                      

                    
	 	 	
                      
                        Its: General
                          Partner

                      

                    
	 	 	 
	 	 	By: 
	
                    	 	
                      

                      
                        
                          
                            
                              Name: Mark
                                Angelo 

                            

                          

                        

                      

                    
	 	 	
                      
                        
                          
                            Title: Portfolio
                              Manager