EXHIBIT 10.5

                  THE WARRANT THE  SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR THE SECURITIES LAWS
OF ANY STATE, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND
REGULATIONS  THEREUNDER OR ANY STATE  SECURITIES  LAWS OR THE PROVISIONS OF THIS
WARRANT.

                    No. of Shares of Common Stock: 1,320,000
                                                   ---------

                                     WARRANT


                           To Purchase Common Stock of

                           American Inflatables, Inc.

                  THIS IS TO CERTIFY THAT Universal Consultants,  Inc., a Nevada
                                          ----------------------------
Corporation,  or its  registered  assigns,  is  entitled,  at any time  from the
Warrant  Issuance  Date (as  hereinafter  defined)  to the  Expiration  Date (as
hereinafter defined ), to purchase from American  Inflatables,  Inc., a Delaware
corporation  (the  "Company"),  One  Million   Three  Hundred  Twenty   Thousand
                                ------------------------------------------------
(1,320,000)  Common Shares (as hereinafter  defined and subject to adjustment as
-----------
provided herein), in whole or in part, including fractional parts, at a purchase
price per share equal to twenty-five  cents ($.25)  (subject to any  adjustments
made to such amount  pursuant  to Section 4 hereto) on the terms and  conditions
and pursuant to the provisions hereinafter set forth.

1.   DEFINITIONS
     -----------

                  As  used  in  this  Warrant,  the  following  terms  have  the
respective meanings set forth below:

                  "Additional  Shares of Common  Stock" shall mean all shares of
Common stock issued by the Company  after the Closing  Date,  other than Warrant
Stock.

                  "Book  Value"  shall  mean,  in respect of any share of Common
Stock on any date herein  specified,  the consolidated book value of the Company
as of the last day of any month immediately  preceding such date, divided by the
number of Fully  Diluted  Outstanding  shares of Common Stock as  determined  in
accordance  with GAAP  (assuming  the  payment of the  exercise  prices for such
shares) by a firm of  independent  certified  public  accountants  of recognized
national  standing  selected  by the Company and  reasonably  acceptable  to the
Holder.

                  "Business  Day" shall  mean any day that is not a Saturday  or
Sunday or a day on which  banks are  required or  permitted  to be closed in the
State of California.

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<PAGE>
                  "Closing Date" shall have the meaning set forth herein.

                  "Commission" shall mean the Securities and Exchange Commission
or any other federal  agency then  administering  the  Securities  Act and other
federal securities laws.

                  "Common Stock" shall mean (except where the context  otherwise
indicates)  the  Common  Stock,  par value  $.01 per  share,  of the  Company as
constituted  on the Closing  Date,  and any capital stock into which such Common
Stock may  thereafter be changed,  and shall also include ( i ) capital stock of
the Company of any other class  (regardless  of how  denominated)  issued to the
holders of shares of Common  Stock upon any  reclassification  thereof  which is
also not  preferred  as to  dividends or assets over any other class of stock of
the Company and which is not subject to  redemption  and ( ii ) shares of common
stock of any successor or acquiring  corporation  received by or  distributed to
the holders of Common Stock of the Company in the circumstances  contemplated by
Section 4.

                  "Current  Warrant Price" shall mean  twenty-five  cents ($.25)
subject to any  adjustments  to such amount made in  accordance  with  Section 4
hereof.

                  "Exchange Act" shall mean the Securities Exchange Act of 1933,
as amended,  or any successor federal statute,  and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.

                  "Exercise  Period"  shall  mean  the  period during which this
Warrant is  exercisable  pursuant to Section 2.1.

                  "Expiration Date" shall mean December 31, 2003.

                  "Fully  Diluted   Outstanding"  shall  mean,  when  used  with
reference to Common Stock,  at any date as of which the number of shares thereof
is to be determined, all shares of Common Stock Outstanding at such date and all
shares of Common Stock issuable in respect of this Warrant,  outstanding on such
date, and other options or warrants to purchase, or securities convertible into,
including without limitation the shares of Common Stock outstanding on such date
which  would be deemed  outstanding  in  accordance  with GAAP for  purposes  of
determining book value or net income per share.

                  "GAAP" shall mean generally accepted accounting  principles in
the United States of America as from time to time in effect.

                  "Holder"  shall mean the  Person in whose name the  Warrant or
Warrant  Stock  set  forth  herein is  registered  on the  books of the  Company
maintained for such purpose.

                  "Market  Price"  per  Common  Share  means the  average of the
closing bid prices of the Common Shares as reported on the National  Association
of  Securities  Dealers  Automated  Quotation  System for the  National  Market,
("NASDAQ")  or, if such  security  is not listed or  admitted  to trading on the
NASDAQ, on the principal national security exchange or quotation system on which
such  security is quoted or listed or admitted to trading,  or, if not quoted or
listed or admitted to trading on any national  securities  exchange or quotation
system, the closing bid price of such security on the over-the-counter market on
the day in question as reported by the National Association of Security Dealers,
Inc., or a similar generally accepted reporting service, as the case may be, for
the five (5) trading days immediately preceding the date of determination.

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<PAGE>

                 "Other Property" shall have the meaning set forth in Section 4.

                  "Outstanding"  shall mean,  when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued  shares of Common  Stock,  except shares then owned or held by or for
the  account of the Company or any  subsidiary  thereof,  and shall  include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.

                  "Person"  shall  mean  any  individual,  sole  proprietorship,
partnership,  joint  venture,  trust,  incorporated  organization,  association,
corporation,  institution,  public  benefit  corporation,  entity or  government
(whether  federal,  state,  county,  city,  municipal or  otherwise,  including,
without limitation,  any instrumentality,  division,  agency, body or department
thereof).

                  "Restricted  Common  Stock"  shall mean shares of Common Stock
which are, or which upon their  issuance on the exercise of this  Warrant  would
be,  evidenced  by a  certificate  bearing the  restrictive  legend set forth in
Section 9.1(a).

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended, or any successor federal statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "Transfer"  shall  mean  any  disposition  of any  Warrant  or
Warrant  Stock or of any interest in either  thereof,  which would  constitute a
sale thereof within the meaning of the Securities Act.

                  "Transfer Notice" shall have the  meaning set forth in Section
9.2.

                  "Warrant  Issuance Date" shall mean any date on which Warrants
are issued pursuant to the Securities Purchase Agreement.

                  "Warrants"  shall mean this  Warrant and all  warrants  issued
upon transfer,  division or combination of, or in substitution for, any thereof.
All  Warrants  shall at all times be identical  as to terms and  conditions  and
date,  except as to the  number of shares of Common  Stock for which they may be
exercised.

                  "Warrant Price" shall mean an amount equal to ( i ) the number
of shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by ( ii ) the Current Warrant Price as of the date of
such exercise.

                  "Warrant   Stock"  shall  mean  the  shares  of  Common  Stock
purchased by the holders of the Warrants upon the exercise thereof.

2.   EXERCISE OF WARRANT
     -------------------

                  2.1. Manner of Exercise.  From and after the Warrant  Issuance
Date and until 5:00 P.M.  California  time, on the Expiration  Date,  Holder may
exercise this warrant, on any Business Day, for all or any part of the number of
shares of Common Stock purchasable hereunder.

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<PAGE>

                  In order to exercise this Warrant, in whole or in part, Holder
shall  deliver to the Company at the office or agency  designated by the Company
pursuant in Section 12, ( i ) a written notice of Holder's  election to exercise
this Warrant, which notice shall specify the number of shares of Common Stock to
be purchased, ( ii ) payment by case, check or bank draft payable to the Company
of the Warrant Price in cash or by wire  transfer or cashier's  check drawn on a
United  States bank or by the holder's  surrender of Warrant Stock (or the right
to receive such number of shares) having an aggregate  Market Price equal to the
Warrant Price for all shares then being purchased and ( iii ) this Warrant. Such
notice shall be substantially in the form of the subscription  form appearing at
the end of this  Warrant as Exhibit A, duly  executed  by Holder or its agent or
attorney.  Upon receipt of the items  referred to in clauses ( i ), ( ii ) and (
iii ) above,  the Company shall,  as promptly as  practicable,  and in any event
with five (5)  Business  Days  thereafter,  execute or cause to be executed  and
deliver  or cause  to be  delivered  to  Holder a  certificate  or  certificates
representing  the aggregate  number of full shares of Common Stock issuable upon
such  exercise,  together  with  cash in lieu of any  fraction  of a  share,  as
hereinafter  provided.  The stock certificate or certificates so delivered shall
be, to the extent  possible,  in such  denomination or  denominations  as Holder
shall  request in the notice and shall be  registered  in the name of Holder or,
subject to Section 9, such other name as shall be designated in the notice. This
Warrant  shall  be  deemed  to have  been  exercised  and  such  certificate  or
certificates shall be deemed to have been issued, and 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 the  Warrant  has been
exercised by payment to the Company of the Warrant Price.  If this Warrant shall
have been exercised in part,  the Company shall,  at the time of delivery of the
certificate or certificates  representing Warrant Stock, 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.

                  The  Holder   shall  be  entitled  to  exercise   the  Warrant
notwithstanding the commencement of any case under 11 U.S.C. SS 101 et seq. (the
"Bankruptcy  Code").  In the event the Company is a debtor under the  Bankruptcy
Code, the Company  hereby waives to the fullest  extent  permitted any rights to
relief it may have under 11 U.S.C.  SS 362 in respect of the  Holder's  exercise
right.  The Company hereby waives to the fullest extent  permitted any rights to
relief it may have  under 11 U.S.C.  SS 362 in respect  of the  exercise  of the
Warrant.  The Company agrees,  without cost or expense to the Holder, to take or
consent to any and all action necessary to effectuate  relief under 11 U.S.C. SS
362.

                  2.2. Payment of Taxes and Charges.  All shares of Common Stock
issuable upon the exercise of this Warrant pursuant to the terms hereof shall be
validly issued, fully paid and nonassessable, and without any preemptive rights.
The Company shall pay all expenses in connection  with,  and all taxes and other
governmental  charges that may be imposed with respect to, the issue or delivery
thereof.

                  2.3.  Fractional  Shares. The Company shall not be required to
issue a fractional share of Common Stock upon exercise of any 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 same  fraction of the Market Price per share
of Common Stock on the relevant exercise date.

                                       5
<PAGE>

                  2.4.  Continued  Validity.  A holder of shares of Common Stock
issued  upon the  exercise  of this  Warrant,  in whole or in part (other than a
holder who acquires  such shares after the same have been publicly sold pursuant
to a  Registration  Statement  under the Securities Act or sold pursuant to Rule
144  thereunder),  shall  continue to be entitled with respect to such shares to
all rights to which it would have been  entitled as Holder under  Sections 9, 10
and 14 of this  Warrant.  The  Company  will,  at the time of  exercise  of this
Warrant,  in whole or in  part,  upon the  request  of  Holder,  acknowledge  in
writing, in form reasonably satisfactory to Holder, its continuing obligation to
afford Holder all such rights;  provided,  however, that if Holder shall fail to
make any such request,  such failure shall not affect the continuing  obligation
of the Company to afford to Holder all such rights.

                  2.5. Right to Convert Warrant. The Holder shall have the right
to convert,  in whole or in part, this Warrant (the  "Conversion  Right") at any
time prior to the expiration of the Exercise Period, into shares of Common Stock
in accordance with this Section 2.5. Upon exercise of the Conversion  Right, the
Company  shall  deliver  to the  Holder  (without  payment  by the Holder of the
Warrant  Price)  that  number of shares of Common  Stock  equal to the  quotient
obtained  by  dividing  (x) the  value  of the  portion  of this  Warrant  being
converted  at  the  time  the  Conversion  Right  is  exercised  (determined  by
subtracting the Warrant Price for the portion of this Warrant being converted in
effect immediately prior to the exercise of the Conversion Right from the amount
obtained by  multiplying  the number of shares of Common Stock issuable upon the
whole or partial  exercise  of this  Warrant,  as the case may be, by the Market
Price  immediately  prior to the  exercise of the  Conversion  Right) by (y) the
Market Price of one share of Common Stock  immediately  prior to the exercise of
the Conversion Right.

                  The  Conversion  Right may be exercised by the Holder,  at any
time or from  time to time,  prior to its  expiration,  on any  business  day be
delivering  a written  notice  (the  "Conversion  Notice") to the Company at the
offices of the Company, exercising the Conversion Right and specifying ( i ) the
total number of shares of Common Stock the Holder will purchase  pursuant to the
conversion  and ( ii ) a place  and  date not  less  than two (2) nor more  than
twenty  (20)  Business  Days from the date of the  Subscription  Notice  for the
closing of such purchase.

                  At any closing  under this  Section 2.5, ( i ) the Holder will
surrender  this  Warrant  and ( ii ) the  Company  will  deliver to the Holder a
certificate  or  certificates  for the number of shares of Common Stock issuable
upon such  conversion.  If this Warrant shall have been  converted only in part,
the  Company  shall,  at the  time of  delivery  of said  stock  certificate  or
certificates,  deliver to the Holder a new Warrant  evidencing the rights of the
Holder to  purchase  the  remaining  shares of Common  Stock  called for by this
Warrant,  which new Warrant  shall in all other  respects be  identical  to this
Warrant,  or, at the request of the Holder,  appropriate notation may be made on
this  Warrant and the same  returned to the  Holder.  The Company  shall pay all
expenses,  taxes and other charges payable in connection  with the  preparation,
issue and delivery of such stock certificates and new Warrants,  except that, in
case such stock  certificates  and/or new Warrants shall be registered in a name
or names other than the name of the Holder,  funds  sufficient  to pay all stock
transfer taxes that are payable upon the issuance of such stock  certificates or
new Warrants shall be paid by the Holder at the time of delivering the notice of
exercise mentioned above.

                                       6
<PAGE>

3.   TRANSFER, DIVISION AND COMBINATION
     ----------------------------------

                  3.1. Transfer. Subject to compliance with Sections 9, 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 referred to in
Section  2.1 or the  office or agency  designated  by the  Company  pursuant  to
Section 12, together with a written assignment of this Warrant  substantially in
the form of Exhibit B hereto duly  executed by Holder or its agent or  attorney.
Upon such  surrender,  the  Company  shall,  subject to Section 9,  execute  and
deliver a new Warrant or Warrants in the name of the assignee or  assignees  and
in the denomination 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.  A Warrant, if properly
assigned in compliance  with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.

                  3.2.  Division  and  Combination.  Subject  to Section 9, this
Warrant may be divided or combined with other Warrants upon presentation  hereof
at the aforesaid office or agency 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
3.1 and  with  Section  9, 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.

                  3.3.  Expenses.   The  Company   shall  prepare,   issue   and
deliver at its own expense the new Warrant or Warrants under this Section 3.

                  3.4. Maintenance of Books. The Company agrees to maintain,  at
its aforesaid office or agency,  books for the registration and the registration
of transfer of the Warrants.

4.   ADJUSTMENTS
     -----------

                  The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant,  shall be subject to adjustment  from time to time as set forth in
this  Section 4. The  Company  shall give Holder  notice of any event  described
below which  requires an  adjustment  pursuant to this  Section 4 at the time of
such event.

                  4.1. Stock Dividends, Subdivisions and Combinations. If at any
time the Company shall:

                           (a) take a record of the  holders of its Common Stock
for the  purpose of  entitling  them to receive a dividend  payable in, or other
distribution of, Additional Shares of Common Stock.

                           (b) subdivide its outstanding  shares of Common Stock
into a larger number of shares of
Common Stock, or

                                       7
<PAGE>

                           (c) combine its  outstanding  shares of Common  Stock
into a smaller number of shares of
Common Stock,

                  then ( i ) the number of shares of Common Stock for which this
Warrant is exercisable  immediately after the occurrence of any such event shall
be adjusted to equal the number of shares of Common Stock which a record  holder
of the same  number  of  shares  of Common  Stock  for  which  this  Warrant  is
exercisable  immediately  prior to the  occurrence of such event would own or be
entitled to receive  after the  happening of such event,  and ( ii ) the Current
Warrant  Price  shall  be  adjusted  to  equal  (A) the  Current  Warrant  Price
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares for which this Warrant is exercisable immediately after such adjustment.

                  No adjustment of the Current Warrant Price shall be made in an
amount  less  than  1% of such  Current  Warrant  Price,  but  any  such  lesser
adjustment  shall be  carried  forward  and  shall  be made at the time of,  and
together  with,  the  next  subsequent   adjustment   which  together  with  any
adjustments  so carried  forward  shall  aggregate an amount equal to or greater
than 1% of such Current Warrant Price.

                  4.2. 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 Holder shall have the right  thereafter  to receive,  upon
exercise of the 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,  subject to the Holder's consent, 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 4. For purposes of this  Section 4.3,  "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


                                       8
<PAGE>

which  are  convertible  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 4.3 shall  similarly
apply to successive reorganizations,  reclassifications, mergers, consolidations
or disposition of assets.

                  4.3.  No Voting  Rights. This  Warrant shall not  entitle  its
Holder to any voting rights or other rights as a shareholder of the Company.

5.   NOTICES TO HOLDER
     -----------------

                  5.l. Notice of  Adjustments.  Whenever the number of shares of
Common  Stock for which this  Warrant is  exercisable,  or whenever the price at
which a share  of such  Common  Stock  may be  purchased  upon  exercise  of the
Warrants,  shall be adjusted  pursuant to Section 4, the Company shall forthwith
prepare a  certificate  to be  executed by an  executive  officer of the Company
setting forth, in reasonable  detail, the event requiring the adjustment and the
method by which such adjustment was calculated,  specifying the number of shares
of Common Stock for which this Warrant is  exercisable  and (if such  adjustment
was made pursuant to Section 4.4 or 4.5)  describing  the number and kind of any
other shares of stock or Other  Property for which this Warrant is  exercisable,
and any change in the purchase price or prices  thereof,  after giving effect to
such  adjustment or change.  The Company shall  promptly  cause a signed copy of
such  certificate to be delivered to the Holder in accordance with Section 14.2.
The Company  shall keep at its office or agency  designated  pursuant to Section
12,  copies of all such  certificates  and cause  the same to be  available  for
inspection  at said office  during  normal  business  hours by the  Holder,  its
representatives,  or any  prospective  purchaser of a Warrant  designated by the
Holder.

                  5.2.   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  whether in cash,  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 of any nature  whatsoever,  or to receive any warrants or
other rights (including, without limitation, rights to subscribe for or purchase
any  evidences  of its  indebtedness,  any  shares  of its  stock  or any  other
securities or property of any nature whatsoever), 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:



                                       9
<PAGE>

then,  in any one or more of such cases,  the Company shall give to Holder ( i )
at least thirty (30) Business  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,
dissolution,  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 thirty (3) Business
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  reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up. Each such written notice shall be sufficiently  given if addressed to Holder
at the  last  address  of  Holder  appearing  on the  books of the  Company  and
delivered in accordance with Section 14.2.

                  A reclassification of the Common Stock (other than a change in
par value,  or from par value to no par value or from no par value to par value)
into  shares of Common  Stock and  shares of any other  class of stock  shall be
deemed a distribution  by the Company to the holders of its Common Stock of such
shares of such other class of stock  within the meaning of this  Section and, if
the outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be  deemed  a  subdivision  or  combination,  as the  case may be,  of the
outstanding shares of Common Stock within the meaning of Section 4.1.

6.   NO IMPAIRMENT
     -------------

                  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 Holder  against  impairment.  Without  limiting the  generality of the
foregoing,  the  Company  will (a) not  increase  the par value of any shares of
Common  Stock  receivable  upon the  exercise of this  Warrant  above the amount
payable  therefor upon such exercise  immediately  prior to such increase in par
value, (b) 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 (c) 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.


                                       10
<PAGE>

                  Upon the  request  of  Holder,  the  Company  will at any time
during the period this Warrant is outstanding  acknowledge  in writing,  in form
reasonably  satisfactory to Holder, the continuing  validity of this Warrant and
the obligations of the Company hereunder.

7.   RESERVATION AND AUTHORIZATION OF COMMON STOCK
     ---------------------------------------------

                  From and after the  Closing  Date,  the  Company  shall at all
times  reserve and keep  available  for issue upon the exercise of Warrants such
number  of its  authorized  by  unissued  shares  of  Common  Stock  as  will be
sufficient  to permit the  exercise  in full of all  outstanding  Warrants.  All
shares of Common Stock which shall be so issuable,  when issued upon exercise of
any Warrant and payment  therefor in accordance  with the terms of such Warrant,
shall be duly and  validly  issued  and fully  paid and  nonassessable,  and not
subject to preemptive rights.

                  Before  taking  any action  which  would  cause an  adjustment
reducing  the Current  Warrant  Price  below the then par value,  if any, of the
shares of Common Stock issuable upon exercise of the Warrants, the Company shall
take any  corporate  action which may be necessary in order that the Company may
validly and legally  issue fully paid and  non-assessable  shares of such Common
Stock at such adjusted Current Warrant Price.

                  Before  taking any action which would result in an  adjustment
in the number of shares of Common Stock for which this Warrant is exercisable or
in the Current Warrant Price,  the Company shall obtain all such  authorizations
or exemptions  thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

8.   TAKING OF RECORD: STOCK AND WARRANT TRANSFER BOOKS
     --------------------------------------------------

                  In the case of all  dividends  or other  distributions  by the
Company to the holders of its Common Stock with  respect to which any  provision
of Section 4 refers to the taking of a record of such holders,  the Company will
in each such case take such a record as of the close of  business  on a Business
Day. The Company will not at any time close its stock  transfer books or Warrant
transfer  books so as to  result in  preventing  or  delaying  the  exercise  or
transfer of any Warrant.

9.   RESTRICTIONS ON TRANSFERABILITY
     -------------------------------

                  The Warrants and the Warrant  Stock shall not be  transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section  9,  which  conditions  are  intended  to  ensure  compliance  with  the
provisions of the  Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant,  agrees to be bound by
the provisions of this Section 9.



                                       11
<PAGE>

                  9.l.  Restrictive Legend. The Holder by accepting this Warrant
and any Warrant  Stock agrees that this Warrant and the Warrant  Stock  issuable
upon  exercise  hereof may not be assigned or otherwise  transferred  unless and
until (i ) the  Company  has  received an opinion of counsel for the Holder that
such securities may be sold pursuant to an exemption from registration under the
Securities Act or (ii) a registration  statement relating to such securities has
been filed by the Company and declared effective by the Commission.

                           (a)  Each  certificate  for  Warrant  Stock  issuable
hereunder shall bear a legend substantially
worded as follows unless such securities have been sold pursuant to an effective
registration statement under the Securities Act:

                                    "The   securities    represented   by   this
                  certificate  have not been registered under the Securities Act
                  of 1933, as amended (the "Act") or any state  securities laws.
                  The  securities may not be offered for sale,  sold,  assigned,
                  offered, transferred or otherwise distributed for value except
                  (i ) pursuant to an effective registration statement under the
                  Act or any  state  securities  laws  or  (ii)  pursuant  to an
                  exemption   from    registration   or   prospectus    delivery
                  requirements  under  the Act or any state  securities  laws in
                  respect  of which the  Company  has  received  an  opinion  of
                  counsel satisfactory to the Company to such effect.  Copies of
                  the agreement covering both the purchase of the securities and
                  restricting  their  transfer  may be  obtained  at no  cost by
                  written   request  made  by  the  holder  of  record  of  this
                  certificate  to the  Secretary of the Company at the principal
                  executive offices of the Company."

                  (b)  Except  as  otherwise  provided  in this  Section  9, the
Warrant shall be stamped or otherwise  imprinted with a legend in  substantially
the following form:

                                    "This Warrant and the securities represented
                  hereby have not been  registered  under the  Securities Act of
                  1933, as amended,  or any state securities laws and may not be
                  transferred   in   violation   of  such  Act,  the  rules  and
                  regulations  thereunder  or any state  securities  laws or the
                  provisions of this Warrant."

                  9.2.  Notice of Proposed  Transfers.  Prior to any Transfer or
attempted Transfer of any Warrants or any shares of Restricted Common Stock, the
Holder shall give five (5) days prior  written  notice (a "Transfer  Notice") to
the Company of Holder's intention to effect such Transfer, describing the manner
and circumstances of the proposed Transfer, and obtain from counsel to Holder an
opinion that the proposed  Transfer of such Warrants or such  Restricted  Common
Stock may be effected  without  registration  under the  Securities Act or state
securities laws. After the Company's receipt of the Transfer Notice and opinion,
such Holder  shall  thereupon  be entitled  to  Transfer  such  Warrants or such
Restricted  Common Stock, in accordance  with the terms of the Transfer  Notice.
Each  certificate,  if any,  evidencing  such shares of Restricted  Common Stock
issued upon such Transfer and the Warrant  issued upon such Transfer  shall bear
the restrictive  legends set forth in Section 9.1, unless in the opinion of such
counsel  such  legend is not  required  in order to ensure  compliance  with the
Securities Act.

                                       12
<PAGE>

                  9.3.   Termination  of   Restrictions.   Notwithstanding   the
foregoing provisions of Section 9, the restrictions imposed by this Section upon
the  transferability  of the Warrants and the Warrants  Stock and the Restricted
Common Stock (or Common Stock  issuable  upon the exercise of the  Warrants) and
the legend  requirements  of Section 9.l shall  terminate  as to any  particular
Warrant or share of Warrant  Stock or  Restricted  Common Stock (or Common Stock
issuable  upon  the  exercise  of the  Warrants)  (i ) when  and as long as such
security  shall have been  effectively  registered  under the Securities Act and
applicable  state securities laws and disposed or pursuant thereto or (ii ) when
the Company  shall have  received an opinion of counsel  that such shares may be
transferred without registration thereof under the Securities Act and applicable
state  securities  laws.  Whenever the  restrictions  imposed by Section 9 shall
terminate as to this Warrant, as hereinabove  provided,  the Holder hereof shall
be entitled to receive from the Company upon written  request of the Holder,  at
the expense of the Company,  a new Warrant bearing the following legend in place
of the restrictive legend set forth hereon:

          "THE RESTRICTIONS OF  TRANSFERABILITY  OF THE WITHIN WARRANT CONTAINED
          IN SECTION 9 HEREOF  TERMINATED ON  ____________,  20__, AND ARE OF NO
          FURTHER FORCE AND EFFECT."

All warrants issued upon  registration of transfer,  division or combination of,
or in  substitution  for,  any Warrant or Warrants  entitled to bear such legend
shall have a similar legend endorsed thereon.  Whenever the restrictions imposed
by this Section shall  terminate as to any share of Restricted  Common Stock, as
hereinabove  provided,  the holder thereof shall be entitled to receive from the
Company,  at the Company's expense,  a new certificate  representing such Common
Stock not bearing the restrictive legends set forth in Section 9.1.

                  9.4. Listing on Securities Exchange. If the Company shall list
any shares of Common Stock on any securities  exchange,  it will at its expense,
list thereon, maintain and, when necessary, increase such listing of, all shares
of Common  Stock  issued  or, to the  extend  permissible  under the  applicable
securities exchange rules, issuable upon the exercise of this Warrant so long as
any shares of Common Stock shall be so listed during the Exercise Period.

10.   SUPPLYING INFORMATION
      ---------------------

                  The Company  shall  cooperate  with Holder in  supplying  such
information  as may be reasonably  necessary for Holder to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the  availability of an exemption from the Securities Act for the
sale of any Warrant or Restricted Common Stock.

11.   LOSS OR MUTILATION
      ------------------

                  Upon receipt by the Company from Holder of evidence reasonably
satisfactory  to it of the  ownership  of and the loss,  theft,  destruction  or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood  that  the  written  agreement  of the  Holder  shall  be  sufficient
indemnity),  and in case of mutilation upon surrender and  cancellation  hereof,
the Company  will execute and deliver in lieu hereof a new Warrant of like tenor
to Holder;  provided, in the case of mutilation,  no indemnity shall be required
if  this  Warrant  in  identifiable  form  is  surrendered  to the  Company  for
cancellation.

                                       13
<PAGE>

12.   OFFICE OF THE COMPANY
      ---------------------

                  As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency (which may be the principal executive offices
of the Company)  where the Warrants may be presented for exercise,  registration
of transfer, division or combination as provided in this Warrant, such office to
be initially located at 947 Newhall Street, Costa Mesa,  California 92627, phone
(949) 515-1776,  fax (949) 515-9765;  provided,  however, that the Company shall
provide  prior  written  notice to Holder  of a change in  address  no less than
thirty (30) days prior to such change.

13.   LIMITATION OF LIABILITY
      -----------------------

                  No provision hereof,  in the absence of affirmative  action by
Holder to purchase  shares of Common  Stock,  and no  enumeration  herein of the
rights or  privileges  of Holder  hereof,  shall give rise to any  liability  of
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.

14.   MISCELLANEOUS
      -------------

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

                  14.2.  Notice Generally.  Except as may be otherwise  provided
herein,  any notice or other  communication  or delivery  required or  permitted
hereunder  shall be in  writing  and shall be  delivered  personally  or sent by
certified mail, postage prepaid, or by a nationally recognized overnight courier
service,  and shall be deemed given when so delivered personally or by overnight
courier service,  or, if mailed, three (3) days after the date of deposit in the
United States mails, as follows:

(a)      if to the Company, to:     American Inflatables, Inc.
                                    947 Newhall Street
                                    Costa Mesa, California 92627
                                    Attention:  Gregg Mulholland
                                    Phone:  (949) 515-1776
                                    Fax:  (949) 515-9765

         with a copy to:            Stepp & Beauchamp, LLP
                                    1301 Dove Street, Suite 480
                                    Newport Beach, California 92660-2422
                                    Attention:  Thomas E. Stepp, Jr., Esq.
                                    Phone:  (949) 660-9700
                                    Fax:  (949) 660-9010

                                       14
<PAGE>


(b)      if to the Purchaser to:



         with a copy to:



                  The Company or  the Holder may  change the  foregoing  address
by notice  given  pursuant to this  Section
14.2.

                  14.3.  Indemnification.  The Company  agrees to indemnify  and
hold  harmless  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 Holder in any manner relating to or arising out of any failure
by the  Company  to perform or  observe  in any  respect  any of its  covenants,
agreements, undertakings or obligations set forth in this Warrant.

                  14.4.  Remedies.  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.  The Company
agrees that  monetary  damages would not be adequate  compensation  for any loss
incurred  by reason  of a breach by it of the  provisions  of this  Warrant  and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

                  14.5  Successors  and Assigns.  Subject to the  provisions  of
Sections 3.1 and 9, this Warrant and the rights  evidenced hereby shall inure to
the  benefit  of and be  binding  upon the  successors  of the  Company  and the
successors and assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this  warrant  and,  with
respect to Section 9 hereof,  holders of Warrant Stock, and shall be enforceable
by any such Holder or holder of Warrant Stock.

                  14.6.  Amendment.  This Warrant and all other  Warrants may be
modified or amended or the provisions  hereof waived only with the prior written
consent of the Company and the Holder.

                  14.7 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 extend
of such  prohibition or invalidity,  without  invalidating the remainder of such
provision or the remaining provisions of this Warrant.

                  14.8  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.



                                       15
<PAGE>

                  14.9 Governing Law. This Warrant shall be governed by the laws
of the State of California, without regard to the provisions thereof relating to
conflict of laws. The Company consents to the jurisdiction of the federal courts
whose  districts  encompass  any part of the city of Costa Mesa in the County of
Orange or the state courts of the State of  California  in  connection  with any
dispute  arising  under  this  Warrant or any of the  transactions  contemplated
hereby,  and  hereby  waives,  to the  maximum  extent  permitted  by  law,  any
objection,  including  any  objections  based on forum  non  conveniens,  to the
bringing of any such proceeding in such jurisdictions.


                  IN WITNESS WHEREOF,  the Company has caused this Warrant to be
duly executed and its corporate seal to be impressed  hereon and attested by its
Secretary or an Assistant Secretary.


Dated:                                   American Inflatables, Inc.
      --------------------


                                          By:
                                              --------------------------
                                                   Gregg Mulholland
                                                   President and CEO

Attest:


By:
     ---------------------
Name:
Title:













                                       16