OPTION AGREEMENT

This Option  Agreement is made and entered into this 2nd day of July, 2001, (the
"Effective Date"), by and between New Cannon, Inc., a company duly organized and
existing  under the laws of the State of Nevada,  United States (the  "Company")
and Mr.  Victor  Freilich  (the  "Optionee").  The Company and the  Optionee are
hereinafter collectively referred to as "Parties" and individually as a "Party".

WHEREAS, the Optionee renders certain valuable services to the Company;

WHEREAS, as consideration for the services rendered by the Optionee, the Company
has agreed to provide the Optionee with an option to purchase Company's stock on
terms and conditions set forth herein;

NOW, THEREFORE, in consideration of mutual covenants and agreements contained in
this Agreement the Parties have agreed as follows:

     1. Grant of Option.  The Company hereby grants to the Optionee an option to
purchase Three Hundred Eighty Two Thousand Fifty Two (382,052)  shares of common
stock to be issued  by the  Company  each  having  par  value of US $0.001  (the
"Shares").

     2.  Option  Term.  The  Optionee  has the right to  exercise  the option to
purchase the Shares within five (5) years of the Effective Date hereof.

     3.  Option  Price.  The price of the  Shares  shall be equal two and a half
percent (2.5%) of the Company's  capitalization on the date of the purchase, but
not exceed two hundred fifty  thousand US Dollars (US $250,000)  (the  "Purchase
Price").

     4.  Consideration.  As  total  consideration  for the  option  to  purchase
Company's  stock the Optionee  has agreed to provide  services to the Company as
may be requested by the Company from time to time.

     5. Procedure to Exercise the Option.

     5.1 Within the  period set forth in Section 2 hereof the  Optionee  has the
right to submit to the Company a written notice of its intention to purchase the
Shares on terms and conditions set forth herein.

     5.2 Within ten (10) days after  receipt of the notic the Company  shall (i)
take all the necessary  corporate  actions to approve the issue of the Shares by
the Company; (ii) enter into the sale purchase agreement with the Optionee;  and
(iii) issue, sell, convey, transfer, and deliver the Shares to the Optionee.

     6. Liquidated Damages. The failure of the Company to fulfil its obligations
under Section 5.2 hereof shall  constitute a material  breach of this Agreement.
Since the real damages caused to the Optionee by such failure shall be difficult

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to calculate the Parties hereby agree that in the event of such material  breach
of this Agreement,  the Company shall pay to the Optionee the liquidated damages
in the amount of two hundred fifty thousand US Dollars (US $250,000).

     7. General Provisions

     7.1 Entire Agreement. This Agreement (including the exhibits hereto and any
written  amendments  hereof  executed  by the  parties)  constitutes  the entire
Agreement and  supersedes  all prior  agreements  and  understandings,  oral and
written, between the parties hereto with respect to the subject matter hereof.

     7.2 Amendment.  This Agreement may only be amended b the written consent of
all of the Parties hereto at the time of such amendment.

     7.3  Severability.  In the event that any of the  provisions,  or  portions
thereof,  or this Agreement are held to be unenforceable or invalid by any court
of competent  jurisdiction,  the validity and  enforceability  of the  remaining
provisions, or portions thereof, shall not be affected thereby.

     7.4  Assignment.  Neither  Party  can  assign or  transfe  its  rights  and
obligations  under this  Agreement  without prior  written  consent of the other
Party, which consent cannot be unreasonably withheld.

     7.5 Notices.  All notices  required to be given hereunder shall be given by
personally  delivering  such notice or by mailing it, via certified mail, to the
other Party at the following addresses:

If to the Company:
304 North Edinburgh Ave.
Los Angeles, CA 90048
Phone (323) 655-7705
Fax (323) 655-7706

If to the Optionee:

The above  addresses may only be changed by giving written notice of such change
of address, via certified mail, to the other Party.

     7.6  Governing  Law.  This  agreement,  and all  transactions  contemplated
hereby, shall be governed by, construed and enforced in accordance with the laws
of State of Nevada, USA.

     7.7 Arbitration. Any controversy arising out of thi Agreement or its breach
shall be settled by Nevada courts.

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     7.8 Adequate  Consideration.  The Parties each  acknowledge  that they have
received adequate consideration for agreeing to enter into this Agreement.

IN WITNESS WHEREOF each Party has caused its duly authorized  representative  to
sign this instrument on the date first written above.

New Cannon, Inc.                                     Mr. Victor Freilich

Evgeny Afineevsky
President & CEO

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