ASSET PURCHASE AGREEMENT

This Asset  Purchase  Agreement  (this  "Agreement"),  dated as of September 17,
2004,  is made and  entered  into by and between  SMALL WORLD TOYS a  California
corporation ("Small World"), and NEUROSMITH, LLC, a California limited liability
company ("Neurosmith").

A.  Neurosmith  has been engaged in the  business of  designing,  producing  and
selling  various  "smart"  toys and related  products  for  children (as defined
below, the "Products").

B. Small World wishes to purchase from Neurosmith, and Neurosmith wishes to sell
to Small World,  the  Purchased  Assets (as defined  below),  upon the terms and
conditions of this Agreement.

In  consideration  of the mutual  promises and covenants  set forth herein,  the
parties hereby agree as follows:

                                   ARTICLE I

                           SALE AND PURCHASE OF ASSETS

1.1 Assets to be  Transferred.  Subject to the terms and conditions set forth in
this  Agreement  and in reliance  upon the  representations  and  warranties  of
Neurosmith  and Small World herein set forth,  at the Closing  Neurosmith  shall
sell, transfer, convey, assign and deliver to Small World, by appropriate deeds,
bills of sale,  assignments and other instruments as set forth herein, and Small
World shall  purchase from  Neurosmith,  all of  Neurosmith's  right,  title and
interest, as of the Effective Time, in and to the Purchased Assets.

1.2 Title to Purchased  Assets.  The Purchased Assets shall be conveyed free and
clear of all  liabilities,  obligations and Liens,  excepting only the Permitted
Liens

1.3 No Other Assets. The Purchased Assets consist solely of those assets defined
as part of the Purchased  Assets  pursuant to Section 12.1 and shall not include
any other  properties or rights,  tangible or intangible.  Without  limiting the
foregoing,  the  Purchased  Assets shall not include any of the  following:  (a)
cash,  cash   equivalents,   securities,   stocks,   and  negotiable   financial
instruments;  (b) Tangible  Personal  Property  (including leases thereof) other
than the Tooling, Prototypes,  Models and Chips; (c) Prepaid Items; (d) Licenses
and Permits;  (e) real  property or interests  in leases of real  property;  (f)
accounts  receivable;  (g) Books and  Records;  (h)  claims,  causes of  action,
choices in action,  rights of recovery and rights of set-off;  and (i) rights to
receive mail and other communications. Although Neurosmith will retain ownership
of the Books and Records,  after the Closing it shall  provide  Small World upon
request  with  reasonable  access to any  Books and  Records  that  Small  World
requires and that are reasonably necessary for its business purposes relating to
the Purchased Assets.

1.4 No Assumption of Liabilities.  Small World shall not assume or be liable for
any  liabilities  or  obligations  of  Neurosmith,  direct or  indirect,  fixed,
contingent or otherwise,  known or unknown, which exist at the Effective Time or
which arise thereafter as a result of any act,  omission or circumstance  taking
place prior to the Effective  Time, and whether or not the same are reflected on
Neurosmith's financial statements,  including, without limitation, the following
liabilities or obligations:

<PAGE>

      1.4.1  any  liability  of  Neurosmith  for  unpaid  taxes  or for  income,
transfer, sales, use and other Taxes, other than Taxes described in Section 2.3,
and

      1.4.2 any  liability  of  Neurosmith  for costs and  expenses  incurred in
connection with this Agreement and the transactions contemplated hereby.

                                   ARTICLE II

                   PURCHASE PRICE, PAYMENT AND RELATED MATTERS

2.1 Purchase  Price;  Payment of the  Purchase  Price.  The purchase  price (the
"Purchase  Price") for the  Purchased  Assets  shall be Eight  Hundred  Thousand
Dollars  ($800,000).  Six Hundred  Thousand  Dollars  ($600,000) of the Purchase
Price shall be paid to Neurosmith  upon Closing (the "Closing  Payment") and the
remaining Two Hundred  Thousand  Dollars  ($200,000) shall be paid by making the
"T&C Payment" on behalf of Neurosmith as defined in Section 2.2.

2.2 Tinkers & Chance.

      2.2.1 Background.  Neurosmith previously had various contacts with Tinkers
& Chance, a partnership  comprised of Warren Heit and Brian Marcus (individually
and  collectively  "T&C").  T&C claims (as  defined  in Section  12.1,  the "T&C
Claims")  that some of the  Products  infringe  upon or violate  certain  issued
and/or  pending  patent  claims and  applications  of T&C (as defined in Section
12.1,  the "T&C Rights".) In connection  with the foregoing,  Neurosmith and T&C
entered into a binding Memorandum of Understanding (the "MOU") pursuant to which
T&C and Neurosmith  entered into various agreements some of which related to the
T&C Rights and their use by Neurosmith.  One of the provisions  called for a Two
Hundred Thousand Dollar ($200,000) payment (defined in the MOU as the "Payment")
that Neurosmith would make to T&C if certain transactions  occurred on or before
March 31, 2004.  There is a pending dispute between T&C as to whether any of the
Transactions  occurred  on or before  March 31, 2004 and  therefore  whether the
Payment was due and owing.

      2.2.2 Payment. Prior to or concurrently with the Closing, Small World will
pay T&C the sum of Two Hundred Thousand  Dollars  ($200,000) (the "T&C Payment")
and obtain from Tinkers & Chance a full and complete  general  release (the "T&C
Release") of all claims,  damages,  liabilities  etc.  that T&C may have against
Neurosmith and any of its affiliates,  owners, managers,  directors,  employees,
attorneys, agents and other representatives (past and present) (individually and
collectively,  the  "Neurosmith  Parties").  The T&C  Payment  shall  explicitly
represent a payment by Small World on behalf of Neurosmith in  consideration  of
T&C's claims against  Neurosmith  and for the T&C Release  provided by Tinkers &
Chance. Neurosmith agrees execute a general release in favor of Tinkers & Chance
and its  partners  (the  "Neurosmith  Release").  The forms of T&C  Release  and
Neurosmith Release are attached hereto Exhibit "B".

2.3 Taxes. Small World shall pay documentary and transfer taxes including sales,
use and excise  taxes if any,  arising out of the sale of the  Purchased  Assets
hereunder. It is also understood that all of the Chips and Tooling are currently
outside of the United States and are to be transferred to Small World where they
are.


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<PAGE>

                                  ARTICLE III

                                     CLOSING

3.1 Time and Place.  The closing  shall take place at the offices of Loeb & Loeb
LLP, 10100 Santa Monica Boulevard, Suite 2200, Los Angeles, California 90067, at
10:00 a.m. local time at such time as Small World and Neurosmith  mutually agree
(the "Closing").  The Closing and the transfer of title,  possession and control
of the  Purchased  Assets shall be effective as of the Effective  Time,  and all
transactions  and  deliveries  at the Closing  shall be deemed to have  occurred
simultaneously.  The "Effective  Time" shall mean 12:01 a.m. Los Angeles time on
the day after the Closing.

3.2 Transactions at the Closing. At the Closing, the following shall occur:

3.2.1  Small  World  shall  deliver  the  Closing  Payment by wire  transfer  in
accordance with instructions from Neurosmith;

3.2.2 Small World shall deliver to Neurosmith evidence  reasonably  satisfactory
to Neurosmith that the T&C Payment has been delivered to T&C;

3.2.3 Small World  shall  deliver to  Neurosmith  the T&C Release  executed  and
delivered by T&C;

3.2.4 Small World shall deliver to Neurosmith  the  certificates  referred to in
Sections 9.1 and 9.2;

3.2.5 Neurosmith shall deliver to Small World assignments in registrable form of
all trademarks, service marks, patents, copyrights and registrations or
applications for the same included within the Purchased Assets and a bill of
sale and assignment covering the balance of the Purchased Assets, in forms
reasonably acceptable to Neurosmith and Small World, together with such other
instruments of sale, transfer, conveyance, assignment and confirmation as are
reasonably required by Small World but in form reasonably acceptable to
Neurosmith. It is understood and agreed that none of the representations or
warranties in the foregoing assignments or bills of sale will supercede,
increase, modify or amend any of the representations or warranties of Neurosmith
in this Agreement nor limit in any manner any of the limitations of liabilities
or disclaimers set forth in this Agreement (so that, it shall be deemed as if
the only representations or warranties made by Neurosmith in the bills of sale
and assignments shall be those set forth herein, the representations and
warranties in the bills of sale and assignments shall be of no force or effect
and that this Agreement shall prevail in all respects in the event of any
conflict between those documents and this Agreement);

3.2.6 Neurosmith shall physically deliver the Models and Prototypes in its
possession. The Tooling and Chips are in the possession of third parties as
described on Exhibit A. Neurosmith shall deliver the Tooling and Chips solely by
providing notice to the third parties described on Exhibit A informing such
third parties of Small World's ownership, in form acceptable to Small World; and


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<PAGE>

3.2.7 Neurosmith shall deliver to Small World the certificates referred to in
Sections 8.1 and 8.2.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
                                  OF NEUROSMITH

Neurosmith hereby represents and warrants to Small World that:

4.1 Organization; Authority; Due Authorization. Neurosmith is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of California and has all requisite power to own, lease
and operate its assets, properties and business and to carry on its business as
conducted. Neurosmith has all requisite power, authority and approvals required
to enter into, execute and deliver this Agreement and all of the other
transaction documents to which it is a party, and to perform fully Neurosmith's
obligations hereunder and thereunder. Neurosmith has taken all actions of a
limited liability company necessary to authorize it to enter into and perform
fully its obligations under this Agreement and all of the other transaction
documents to be executed by it and to consummate the transactions contemplated
herein and therein. This Agreement has been duly and validly executed by
Neurosmith and (assuming the due authorization, execution and delivery by Small
World) constitutes the legal, valid and binding obligation of Neurosmith,
enforceable in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
Applicable Laws affecting creditors' rights generally or by general equitable
principles affecting the enforcement of contracts.

4.2 No Violation. Neither the execution or delivery by Neurosmith of this
Agreement and all other transaction documents to which Neurosmith is a party,
nor the consummation of the transactions contemplated hereby and thereby will
(with or without notice or lapse of time or both): (i) violate any provision of
the Articles of Organization, Operating Agreement, bylaws or other charter
documents of Neurosmith; (ii) require the consent of any party; (iii) violate in
any material respect any Applicable Law or Order, the violation of which may
affect the Purchased Assets or Small World's rights therein; or (iv) result in
the creation of any Lien or other encumbrance upon any of the Purchased Assets.

4.3 Regulatory Approvals and Other Consents. No consent, approval,
authorization, or exemption from, nor any notice to or filing with, any
Governmental Authority is required to consummate the transactions contemplated
herein.

4.4 Title to Tangible Assets. Section 4.4 of Neurosmith's Disclosure Schedule
sets forth a description of the Models, Tooling and Chips, including the
location thereof. Except as indicated in Section 4.4 of Neurosmith's Disclosure


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<PAGE>

Schedule and except for Permitted Liens: (a) Neurosmith has good and marketable
title owned by it to each item of Tangible Assets, free and clear of all Liens
or other encumbrances; (b) no officer, director, shareholder or employee of
Neurosmith, nor any Affiliate thereof, owns directly or indirectly, in whole or
in part, any item of the Tangible Assets or has any other interest therein; (c)
Neurosmith has the valid and enforceable right to receive and/or use each of the
items of Tangible Assets in which Neurosmith has any other interest, free and
clear of all Liens; and (d) the delivery to Small World of the instruments of
transfer of ownership of the Tangible Assets contemplated by this Agreement will
at the Effective Time vest good and marketable title to, or the valid and
enforceable right to receive and/or use, the Tangible Property in Small World,
free and clear of all Liens. Neurosmith makes no representation or warranty
whatsoever as to the physical condition of any Tangible Assets (including
whether any such Tangible Asset is in good operating condition and repair or
usable in the ordinary course of business). Neurosmith also makes no
representation or warranty that the Products will conform to any Applicable Laws
or meet any applicable health and safety, consumer protection or environmental
protection rules, regulations orders or laws.

4.5 Intellectual Assets. Except as set forth in Neurosmith's Disclosure Schedule
4.5 and except for the T&C Claims, to the Knowledge of Neurosmith: (i)
Neurosmith is the owner of all right, title and interest in and to each of the
Intellectual Assets (excluding the Miscellaneous Assets, which are transferred
"as is" without representation) free and clear of all Liens, other than
Permitted Liens; (ii) none of the Intellectual Assets (other than Miscellaneous
Assets) is subject to any Taxes, maintenance fees or actions falling due within
90 days after the date hereof (it being understood that not all of trademarks
have been registered and that this representation does not relate to
registration fees or actions for trademarks); (iii) there are no pending claims,
actions, judicial or other adversary proceedings, disputes or disagreements
involving Neurosmith concerning any item of the Intellectual Assets, and no such
action, proceeding, dispute or disagreement is threatened; (iv) the Intellectual
Assets do not infringe upon the Intellectual Property Rights of any third
person, including patent, copyright, and trade secrets; (iii) all officers,
employees and consultants of Neurosmith who were involved in any material manner
in developing any of the Intellectual Assets) have executed and delivered to
Neurosmith agreements regarding the protection of proprietary information and
the assignment to Neurosmith of all Intellectual Property Rights arising from
the services performed for Neurosmith by such Persons, and Neurosmith has made
available to Small World or its counsel copies of all such agreements; and (iv)
no employee or consultant of Neurosmith violated any term of any employment
Contract, disclosure agreement, non-competition agreement or any other Contract
or restrictive covenant relating to the right of such Person to be employed or
engaged by Neurosmith or to use the Intellectual Property rights of others.
Neurosmith makes no representation that any Intellectual Property Right in any
Intellectual Asset is valid and enforceable. A list of trademarks and patents
and patent applications is set forth on Exhibit C.

4.6 Contracts. There are no executory obligations or liabilities arising from
any Contracts relating to the Purchased Assets that could be or may result in a
Lien or otherwise affect the Purchased Assets after the sale and transfer to
Small World.

4.7 Litigation. Except as set forth in Section 4.7 of Neurosmith's Disclosure
Schedule and except for the T&C Claims, to Neurosmith's Knowledge, there is no
action, suit, proceeding or investigation pending or threatened: (i) against
Neurosmith by any Person with respect to any of the Purchased Assets or which
could create a Lien or other obligation against or relating to the ownership of
the Purchased Assets; (ii) seeking to prohibit or restrict the sale and purchase
of the Purchased Assets or the carrying out of any of the other transactions
contemplated by this Agreement. Neurosmith is not subject to any judgment,
order, decree, award, writ, injunction, decision, ruling or finding that may
have an adverse affect on this Agreement or the rights of Small World in and to
the Purchased Assets.


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<PAGE>

4.8 Applicable Law. To Neurosmith's knowledge, Neurosmith has, in all material
respects, complied with and is now in all material respects, in compliance with
all Applicable Laws and Orders.

4.9 Representations and Warranties on Closing. The representations and
warranties contained in this ARTICLE IV shall be true and complete in all
material respects at and as of the Effective Time with the same force and effect
as though such representations and warranties had been made at and as of the
Effective Time.

                                   ARTICLE V

                  REPRESENTATIONS AND WARRANTIES OF SMALL WORLD

Small World represents and warrants to Neurosmith as follows:

5.1 Due Incorporation; Power. Small World is a corporation duly organized,
validly existing and in good standing under the Applicable Laws of its
jurisdiction of incorporation. Small World has all requisite power, authority
and approvals required to enter into, execute and deliver this Agreement and all
of the other transaction documents to which it is a party, and to perform fully
Small World's obligations hereunder and thereunder.

5.2 Authority to Execute and Perform Agreements. Small World has all requisite
power, authority and approval required to enter into, execute and deliver this
Agreement and the other Small World Documents and to perform fully Small World's
obligations hereunder and thereunder.

5.3 Due Authorization; Enforceability. Small World has taken all corporate
actions necessary to authorize it to enter into and perform its obligations
under this Agreement and all other documents to which it is a party and to
consummate the transactions contemplated herein and therein. This Agreement has
been duly and validly executed by Small World and (assuming the due
authorization, execution and delivery by Neurosmith) constitutes the legal,
valid and binding obligations of Small World, enforceable in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Applicable Laws affecting creditors'
rights generally or by general equitable principles affecting the enforcement of
contracts.

5.4 No Violation. Neither the execution and delivery of this Agreement and all
other transaction documents to which Small World is a party, nor the
consummation of the transactions contemplated hereby and thereby will (with or
without notice or lapse of time or both): (i) violate any provision of the
Articles of Incorporation or bylaws of Small World; (ii) require the consent of
any party; or (iii) violate in any material respect any Applicable Laws or
Orders, the violation of which may affect the transactions contemplated by this
Agreement.


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<PAGE>

5.5 Regulatory Approvals. No consent, approval,  authorization,  notice, filing,
or exemption is required to consummate the transactions contemplated herein.

5.6 Representations and Warranties on Closing. The representations and
warranties contained in this ARTICLE V shall be true and complete in all
material respects at and as of the Effective Time.

                                   ARTICLE VI

                     COVENANTS AND AGREEMENTS OF THE PARTIES
                           EFFECTIVE PRIOR TO CLOSING

The parties hereto covenant and agree as follows:

6.1 Business Examinations and Physical Investigations of Assets. Prior to the
Effective Time, Small World shall be entitled, through its employees and
representatives, including, without limitation, Loeb & Loeb LLP and Lewis Anten,
to make such investigations and examinations relating to the Purchased Assets as
Small World may reasonably request (including where reasonably related to the
Purchased Assets the Books and Records of Neurosmith). Neurosmith shall furnish
Small World and its representatives during such period with all information
concerning the affairs of Neurosmith as Small World or such representatives may
request and cause Neurosmith's officers, employees, consultants, agents,
accountants and attorneys to cooperate fully with Small World and such
representatives and to make full disclosure of all information and documents
requested by Small World and/or such representatives. No investigation by Small
World shall, however, diminish or obviate in any way, or affect Small World's
right to rely upon, any of the representations, warranties, covenants or
agreements of Neurosmith contained in this Agreement.

6.2 Conduct of Business. From the date hereof through the Effective Time,
Neurosmith shall not undertake, and shall use reasonable commercial efforts to
avoid failing to undertake, any action if such action or failure would render
any of its warranties and representations untrue as of the Effective Time. The
failure of Neurosmith to fulfill its obligations shall, if material, permit
Small to terminate this Agreement as Small World's sole and exclusive remedy for
such failure.

6.3 Arrangements with Employees. From the date hereof until the Effective Time,
Neurosmith shall permit Small World to approach and negotiate with any or all of
the ex-employees of Neurosmith with respect to their employment by Small World
following the Closing. Neurosmith shall use reasonable efforts to assist Small
World in such negotiations.

6.4 No Solicitation or Negotiation. Neurosmith and its members shall not cause,
suffer or permit any of Neurosmith's members, directors, officers, employees,
representatives, agents, investment bankers, advisors, accountants or attorneys
to (a) initiate or solicit any inquiries or the making of any proposal, or (b)
engage in negotiations or discussions with any Person, or (c) provide any
confidential information or data to any Person, with respect to any acquisition,
business combination or purchase of all of any significant part of the Purchased
Assets.


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<PAGE>

6.5 Risk of Loss. Neurosmith hereby assumes all risk of material adverse change,
loss, damage and destruction to all or any part of the Purchased Assets until
the Effective Time from any cause whatsoever.

6.6 Title to Chips and Tooling Small World and Neurosmith shall obtain
confirmation from the factories holding the Tooling and Chips that, upon the
Effective Date the Tooling and Chips will be the sole property of Small World
and that such factories are not owed any amount from Neurosmith or otherwise
with respect to the Purchased Assets. In connection therewith, it is understood
that Neurosmith's representations regarding title to the Tooling and Chips are
subject to the receipt of such confirmations without the payment of any monies
by Neurosmith. If such confirmation is not obtained, the sole right of either
party shall be to terminate this Agreement and there shall be no breach of this
Agreement or claim of default in such circumstance.

                                  ARTICLE VII

                     CONDITIONS PRECEDENT TO THE OBLIGATION
                             OF EACH PARTY TO CLOSE

The obligations of Neurosmith and Small World to consummate the transactions
contemplated herein shall be subject to the fulfillment, at or prior to the
Closing of all of the conditions set forth below in this ARTICLE VII.

7.1 No Action or Proceeding. No action, suit, or proceeding shall have been
instituted or threatened before any court or governmental body seeking to
challenge or restrain the transactions contemplated herein which presents a
substantial risk that such transactions will be restrained or that either party
hereto may suffer material damages or other relief as a result of consummating
such transactions.

7.2 Governmental and Other Approvals. Any and all permits and approvals from any
Authority required for the lawful consummation of the transaction contemplated
herein shall have been obtained.

7.3 Tinkers & Chance License Agreement; Release. Small World shall have entered
into a license agreement with T&C in form and substance reasonably acceptable to
Small World and Neurosmith (solely as to the T&C Release) pursuant to which T&C
will grant a non-exclusive worldwide license under those patent and patent
applications owned by T&C relating to the Products. T&C will have executed and
delivered the T&C Release.

                                  ARTICLE VIII

                     CONDITIONS PRECEDENT TO THE OBLIGATION
                             OF SMALL WORLD TO CLOSE

The obligation of Small World to consummate the transactions contemplated herein
shall be subject to the fulfillment, at or before the Closing Date, of all of
the conditions set forth below in this ARTICLE VIII.


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<PAGE>

8.1 Representations and Warranties. The representations and warranties of
Neurosmith contained in this Agreement and in each other transaction document
shall have been true and correct when made and shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date, other than such representations
and warranties as are made as of another specified date, which shall be true and
correct as of such date, and at the Closing, Neurosmith shall deliver to Small
World a certificate to such effect.

8.2 Performance of Covenants. Each obligation of Neurosmith to be performed by
it on or before the Closing Date pursuant to the terms of this Agreement and
each other transaction document shall have been duly performed on or before the
Closing Date, and at the Closing Neurosmith shall have delivered to Small World
a certificate to such effect.

8.3 Updated Schedules. Neurosmith shall have delivered to Small World an updated
Neurosmith's Disclosure Schedule reasonably acceptable to Small World and dated
no later than one business day prior to the Closing Date.

                                   ARTICLE IX

                     CONDITIONS PRECEDENT TO THE OBLIGATION
                             OF NEUROSMITH TO CLOSE

The obligation of Neurosmith to consummate the transactions contemplated herein
shall be subject to the fulfillment, at or before the Closing Date, of all the
conditions set forth below in this ARTICLE IX.

9.1 Representations and Warranties. The representations and warranties of Small
World contained in this Agreement shall be true on and as of the Closing Date in
all material respects with the same force and effect as though made on and as of
the Closing Date, other than such representations and warranties as are made as
of another specified date, which shall be true and correct as of such date, and
at the Closing Small World shall have delivered to Neurosmith a certificate to
such effect.

9.2 Performance of Covenants. Each of the obligations of Small World to be
performed by it on or before the Closing Date pursuant to the terms of this
Agreement shall gave been duly performed on or before the Closing Date, and, at
the Closing, Small World shall have delivered to Neurosmith a certificate to
such effect.

                                   ARTICLE X

                                 INDEMNIFICATION

10.1 Indemnification by Neurosmith. Neurosmith shall, indemnify, defend and hold
harmless (i) Small World, (ii) each of Small World's Affiliates, assigns and
successors in interest, and (iii) each of their respective shareholders,
directors, officers, employees, agents, attorneys and representatives, from and
against any and all damages, awards, judgments, payments, diminutions in value
and other losses (including, without limitation, legal fees and expenses)
however suffered or characterized, which may be incurred or suffered by any such


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<PAGE>

party and which may arise out of or result from (i) any breach of any
representation, warranty, covenant or agreement of Neurosmith contained in this
Agreement; (ii) litigation, arbitration, governmental investigation, suit,
action or other proceedings related to the Purchased Assets of Neurosmith
arising from any occurrence prior to the Effective Time; (iii) any tax
obligation of Neurosmith relating to any period prior to the Effective Time;
(iv) any debt, liability or obligation of Neurosmith direct or indirect, fixed,
contingent or otherwise, now or as of the Effective Time known or unknown, and
whether or not then due or payable, which exists at or as of the Effective Time
or which arises after the Effective Time but which is based upon or arises from
any act, omission, transaction, circumstance, sale of goods or services, state
of facts or other condition which occurred or existed at or before the Effective
Time; and (v) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including, without limitation, legal
fees and expenses) incurred in enforcing this indemnity.

10.2 Indemnification by Small World. Small World shall, indemnify, defend and
hold harmless (i) Neurosmith (ii) each of Neurosmith's Affiliates, assigns and
successors in interest, and (iii) each of their respective shareholders,
members, directors, officers, employees, agents, attorneys and representatives,
from and against any and all damages, awards, judgments, payments, diminutions
in value and other losses (including, without limitation, legal fees and
expenses) however suffered or characterized, which may be incurred or suffered
by any such party and which may arise out of or result from (i) any breach of
any representation, warranty, covenant or agreement of Small World contained in
this Agreement; (ii) litigation, arbitration, governmental investigation, suit,
action or other proceedings related to the Purchased Assets arising from any
occurrence from and after the Effective Time (including any such matters raised
by T&C with arising from the Purchased Assets after the Effective Time); (iii)
any tax obligation of Small World relating to any period from and after the
Effective Time; (iv) any debt, liability or obligation of Small World, direct or
indirect, fixed, contingent or otherwise, known or unknown, and whether or not
then due or payable, which arises from and after the Effective Time; and (v) any
and all actions, suits, proceedings, claims, demands, assessments, judgments,
costs and expenses (including, without limitation, legal fees and expenses)
incurred in enforcing this indemnity.

                                   ARTICLE XI

                              TERMINATION; REMEDIES

11.1   Termination   Without   Default.   Anything   herein   to  the   contrary
notwithstanding,  this Agreement may otherwise be terminated  before the Closing
only as follows (and in no other manner):

      11.1.1 Mutual Consent. By the mutual consent in writing of the parties.

      11.1.2 Conditions to Small World's Performance Impossible.  By Small World
upon  written  notice to  Neurosmith  if any event  occurs  which  would  render
impossible  the  satisfaction  of one or more  conditions to the  obligations of
Small World set forth in ARTICLE VII and ARTICLE VIII.


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<PAGE>

      11.1.3 Conditions to Neurosmith's  Performance  Impossible.  By Neurosmith
upon  written  notice to Small  World if any event  occurs  which  would  render
impossible  the  satisfaction  of one or more  conditions to the  obligations of
Neurosmith set forth in ARTICLE VII and ARTICLE IX.

11.2 Termination Upon Default. Either party may terminate this Agreement by
giving notice to the other on or prior to the Closing Date, without prejudice to
any rights or obligations it may have, if (i) after written notice of the
default and the passage of thirty (30) Business Days, or such shorter period as
may end upon the scheduled Closing Date, in the case of a default which by its
nature is capable of being cured and is not cured by the end of such period, the
other party has failed in the due and timely performance of any of its covenants
or agreements herein contained or there shall have been a breach of the other's
warranties or representations herein contained, and (ii) such failure or breach
could reasonably be expected to give the non-defaulting party grounds not to
close pursuant to ARTICLES VII, VIII, and IX, as the case may be. In any such
event the party who is not guilty of the breach may, in addition to all of its
other rights and remedies, recover all Losses incurred by it from the party
responsible for the breach.

11.3 Specific Performance. The parties acknowledge that the Purchased Assets are
unique and cannot be obtained by Small World except from Neurosmith and for that
reason, among others, Small World will be irreparably damaged in the absence of
the consummation of this Agreement. Therefore, in the event of any breach by
Neurosmith of this Agreement, Small World shall have the right, at its election,
to obtain an order for specific performance of this Agreement, without the need
to post a bond or other security, to prove any actual damage or to prove that
money damages would not provide an adequate remedy.

11.4 Attorneys' Fees. If Neurosmith or Small World shall bring an action against
the other by reason of any alleged breach of any covenant, provision or
condition hereof, or otherwise arising out of this Agreement, the unsuccessful
party shall pay to the prevailing party all attorneys' fees and costs actually
incurred by the prevailing party, in addition to any other relief to which it
may be entitled. As used in this Section 11.4 and elsewhere in this Agreement,
"actual attorneys' fees" or "attorneys' fees actually incurred" means the full
and actual cost of any legal services actually performed in connection with the
matter for which such fees are sought calculated on the basis of the usual fees
charged by the attorneys performing such services, and shall not be limited to
"reasonable attorneys' fees" as that term may be defined in statutory or
decisional authority.

                                   ARTICLE XII

                                   DEFINITIONS

12.1  Definitions.  When used in this Agreement,  the following terms shall have
the respective meanings set forth below:

      "Affiliate" shall mean with respect to any Person (i) a Person directly or
indirectly controlling,  controlled by or under common control with such Person;
(ii) a  Person  owning  or  controlling  10% or more of the  outstanding  voting
securities of such Person; or (iii) an officer,  director,  member or partner of
such Person.  When the Affiliate is an officer,  director,  member or partner of
such Person,  any other  Person for which the  Affiliate  acts in that  capacity
shall also be  considered an Affiliate.  For these  purposes,  control means the
possession, direct or indirect, of the power to direct or cause the direction of
the  management  and policies of a Person,  whether its the  ownership of voting
securities, by contract or otherwise.


                                       11
<PAGE>

         "Agreement" shall mean this Asset Purchase Agreement, including all
exhibits and schedules thereto, as the same may hereafter be amended, modified
or supplemented from time to time in accordance with the provisions of Section
13.6.

         "Applicable Law" shall mean, with respect to any Person, any domestic
or foreign, federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, Order, writ, injunction, directive,
judgment, decree or other requirement of any Authority applicable to such Person
or any of its Affiliates or any of their respective properties, assets,
officers, directors, general partners, managers, employees, consultants or
agents (in connection with such officer's, director's, general partner's,
manager's, employee's, consultant's or agent's activities on behalf of such
Person or any of its Affiliates).

         "Authority" shall mean any governmental, regulatory or administrative
body, agency or authority, any court of judicial authority, any arbitrator or
any public, private or industry regulatory authority, whether Federal, state,
local or foreign.

         "Books and Records" of a Person shall mean all books and records,
ledgers, employee records, customer lists, files, correspondence, computer data
bases, accounting information and other records of every kind, whether written,
computerized or maintained in any other medium, which are owned by that Person
or in which that Person has any interest.

         "Chips" shall mean those computer chips and other parts listed on
Exhibit "B".

         "Closing Date" shall mean the date upon which the Closing occurs.

         "Contracts" of a Person shall mean all contracts, agreements,
warranties, guaranties, indentures, bonds, options, leases, subleases,
easements, mortgages, plans, collective bargaining agreements, licenses,
commitments or binding arrangements of any nature whatsoever, express or
implied, written or unwritten, and all amendments thereto, entered into or
binding upon that Person or to which any property of that Person may be subject.

         "Intellectual Assets" shall mean all Intellectual Property Rights in
the Products and in the Miscellaneous Rights.


                                       12
<PAGE>

         "Intellectual Property Rights" shall mean: (i) all registered and
unregistered trademarks, service marks, trade names (including product names),
trade dress, logos, corporate names, tag lines, slogans and commercial symbols
associated with such asset, including all applications therefore, and all
associated goodwill; (ii) all statutory, common law and registered copyrights,
all applications therefore and all associated goodwill required for the
manufacture and exploitation of such asset; (iii) all patents and patent
applications, all associated technical information, shop rights, know-how, trade
secrets, processes, operating, maintenance and other manuals, drawings and
specifications, process flow diagrams and related data, and all associated
goodwill required for the manufacture and exploitation of such asset; (iv) all
software (source and object code) required for the manufacture and exploitation
of such asset and all documentation thereof (including all electronic data
processing systems and program specifications, functional specifications, source
and object codes, algorithms, architecture, input data, report layouts and
format, record file layouts, diagrams, narrative descriptions and flow charts)
other than "off the shelf" software purchased in retail transactions; (v) all
other mask works, moral rights, inventions, discoveries, conceptions,
improvements, reductions to practice, plans (including advertising materials),
processes, formulae (secret or otherwise), data, drawings, specifications, trade
secrets, confidential information, financial, pricing and cost models and
information, operating procedures, supplier lists required for the manufacture
and exploitation of such asset; (vii) all drawings, copy, art (including
packaging artwork), Product content (including any rights to music and any
licenses for such music, to the extent transferable), records, books or other
tangible media embodying the foregoing; (viii) all rights to obtain and rights
to register patents, trademarks and copyrights; (ix) all rights, if any in the
URL "Neurosmith.com" and the "content" for such URL. For purposes of this
Agreement, Intellectual Property Rights does not include any rights to sue or
recover and retain damages and costs and attorneys fees for infringement of any
of the foregoing arising prior to the Effective Time.

         "Knowledge" shall mean, with respect to Neurosmith, the actual
knowledge of each Barre Rorabaugh, John Sosoka and Brooke Abercrombie.

         "Licenses and Permits" of a Person shall mean all licenses and permits
issued to that Person or in which that Person has any interest (including the
right to use).

         "Lien" shall mean any lien, pledge, mortgage, security interest, lease,
charge, conditional sales contract, option, restriction, reversionary interest,
right of first refusal, voting trust arrangement, preemptive right, claim under
bailment or storage contract, easement or any other adverse claim or right
whatsoever.

         "Miscellaneous Assets" shall mean those items of Intellectual Property
Rights listed on Exhibit "B".

         "Models" shall mean models of Products that were in development for
2004; models are non-working mock-ups of Products in various stages.

         "Order" shall mean any decree, order, judgment, writ, award,
injunction, rule or consent of or by an Authority.

         "Permitted Liens" shall mean Liens set forth on Section 4.4 of
Neurosmith's Disclosure Schedule.

         "Person" shall mean any entity, corporation, company, association,
joint venture, joint stock company, partnership, trust, organization, individual
(including personal representatives, executors and heirs of a deceased
individual), nation, state, government (including agencies, departments,
bureaus, boards, divisions and instrumentalities thereof), trustee, receiver or
liquidator, as well as any syndicate or group that would be deemed to be a
Person under Section 13(d)(3) of the Securities Exchange Act of 1934.


                                       13
<PAGE>

         "Prepaid Items" of a Person shall mean all prepaid items (such as
insurance deposits, municipal or local tax payments or deposits, utility
deposits and the like), deferred charges, reserve accounts and other security
and similar deposits owned by that Person or in which that Person has any
interest.

         "Products" shall mean those toys and related items described as
products on Exhibit "A".

         "Purchased Intellectual Property" shall mean all intangible rights in
the Products and all Intellectual Property Rights associated with such toys and
related products, together with all rights in the name "Neurosmith".

         "Prototypes" shall mean those prototypes of Products that were under
development for 2004; a prototype is a model of a product with some working
features, although there is no representation as to completeness of the
Prototype.

         "Purchased Assets" shall mean solely the Purchased Intellectual
Property, the Prototypes, the Models, the Chips and the Miscellaneous Assets.

         "Neurosmith's Disclosure Schedule" shall mean the schedule entitled
"Neurosmith's Disclosure Schedule", dated of even date herewith, delivered to
Small World and executed by Neurosmith. Neurosmith's Disclosure Schedule shall
be considered a part of this Agreement.

         "Tangible Assets" means the Tooling, Chips, Models and Prototypes.

         "Tangible Personal Property" of a Person shall mean all tooling, chips,
equipment, furniture, trade fixtures, computers, supplies, spare parts, tools,
inventories, stores, Books and Records and other tangible personal property
owned by that Person, leased by that Person or in which that Person has any
other interest (including the right to use).

         "Tax" shall mean any federal, state, local or foreign tax, charge, fee,
levy, deficiency or other assessment of whatever kind or nature (including
without limitation, any net income, gross income, gross receipts, sales, use,
value added, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, unemployment, excise, estimated, severance, stamp,
occupation, real property, personal property, intangible property, occupancy,
recording, minimum, environmental and windfall profits tax, including any
liability therefore as a transferee (including without limitation under Section
6901 of the Code or any similar provision of Applicable Law), as a result of
Treasury Regulation Section 1.1502-6 or any similar provision of Applicable Law,
or as a result of any tax sharing or similar agreement, together with any
interest, penalty, addition to tax or additional amount imposed by any Tax
Authority. "Taxing" and Taxable" shall have the correlative meanings.

         "T&C Claims" shall mean any and all claims, demands, cause of actions
and similar rights that T&C may at any time assert against the Purchased Assets
or Neurosmith including any claims that any of the Purchased Assets or the
Intellectual Property Rights therein violate or infringe upon in any manner any
of the T&C Rights.


                                       14
<PAGE>

         "T&C Rights" shall mean any Intellectual Property Rights claimed by
T&C, including rights in patents and patent applications and the subject
inventions, as well as all other Intellectual Property Rights in such
inventions.

12.2 Other  Defined  Terms.  In  addition  to those  terms  defined  above,  the
following terms shall have the respective meanings given to them in the Sections
indicated below:

         Term                               Section

         Effective Time                     Section 4.1
         Purchase Price                     Section 2.1
         Small World                        Preamble
         Neurosmith                         Preamble
         T&C                                Section 2.1
         T&C Payment                        Section 2.2
         Neurosmith Parties                 Section 2.2
         Neurosmith Release                 Section 2.2

12.3 Other Interpretive Provisions. References in this Agreement to "Articles,"
"Sections," "Exhibits" and "Schedules," shall be to the Articles, Sections,
Exhibits and Schedules of this Agreement, unless otherwise specifically
provided; where the context or construction requires, all words applied in the
plural shall be deemed to have been used in the singular, and vice versa; the
masculine shall include the feminine and neuter, and vice versa; and the present
tense shall include the past and future tense, and vice versa; the words
"herein", "hereof" and "hereunder" and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; and except as otherwise specified in
this Agreement, all references in this Agreement (a) to any Person shall be
deemed to include such Person's permitted heirs, personal representatives,
successors and assigns, (b) to any agreement, any document or any other written
instrument shall be a reference to such agreement, document or instrument
together with all exhibits, schedules, attachments and appendices thereto, and
in each case as amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms thereof prior to the Effective Time and (c)
to any law, statute or regulation shall be deemed references to such law,
statute or regulation as the same may be supplemented, amended, consolidated,
superseded or modified from time to time prior to the Effective Time. All
accounting terms used herein have the meanings ascribed to them under GAAP.

                                  ARTICLE XIII

                                  MISCELLANEOUS

13.1 Expenses of Sale. Each Party shall bear its own direct and indirect
expenses incurred in connection with the negotiation and preparation of this
Agreement and the other transaction documents and the consummation and
performance of the transactions contemplated herein and therein.


                                       15
<PAGE>

13.2 Publicity.  No publicity release or announcement  concerning this Agreement
or the transactions  contemplated herein shall be issued without advance written
approval of both  parties,  except as may be required by  applicable  securities
laws in which case the parties  shall  consult  with each other with  respect to
text and means of communication of any such release or announcement.

13.3 Notices. All notices,  requests and other communications hereunder shall be
in writing and shall be delivered by courier or other means of personal  service
(including by means of a nationally recognized courier service or a professional
messenger service),  or sent by telex or telecopy or mailed first class, postage
prepaid, by certified mail, return receipt requested, in all cases, addressed to
the other party at its last known address.

13.4 Survival of Representations and Warranties;  No Other Representations.  The
representations, warranties, covenants and agreements made by the parties hereto
in the  Agreement,  and any  schedule  or  document  delivered  pursuant  to the
Agreement,  shall  survive the  Closing  for a period of two (2) years.  Neither
party is making any  representation  or warranty not  expressly set forth herein
and   all   other   representations   and   warranties,   including   those   of
merchantability,  fitness for a particular purpose and infringement,  are hereby
disclaimed.

13.5  Further  Assurances.  Each of the  parties  shall use its  reasonable  and
diligent  best efforts to proceed  promptly with the  transactions  contemplated
herein, to fulfill the conditions precedent for such party's benefit or to cause
the same to be fulfilled and to execute such further  documents and other papers
and perform  such  further  acts as may be  reasonably  required or desirable to
carry  out the  provisions  hereof  and the  transactions  contemplated  herein.
Without limiting the foregoing,  Neurosmith shall take such further actions,  as
Small World may  reasonably  deem  necessary  or desirable in order to transfer,
convey and assign to Small World,  and to confirm Small World's title to, all of
the Purchased Assets to assist Small World in exercising all rights with respect
thereto  (provided that any material cost of such  assistance  shall be borne by
Small World.)

13.6  Amendments.  This  Agreement  may be modified or amended only by a written
instrument signed by the party sought to be bound.

13.7 Entire  Agreement.  This  Agreement,  and any documents  attached hereto or
incorporated  herein by reference,  constitutes the entire agreement between the
parties with respect to the subject matter hereof.

13.8 Governing Law and Venue.  This Agreement is to be governed by and construed
in  accordance  with the laws of the State of California  without  regard to the
conflicts  of laws  principles  thereof.  Any suit  brought  hereon,  whether in
contract,  tort,  equity or otherwise,  shall be brought in the state or federal
courts sitting in Los Angeles, California, the parties hereto hereby waiving any
claim or defense that such forum is not convenient or proper.

13.9  Arbitration.  Except as  otherwise  provided  in this  Section  14.9,  the
exclusive  method for  resolving any  disputes,  controversies  or claims of any
nature,  including  those arising out of or relating to this  Agreement,  or the
making, validity, interpretation, performance or breach of this Agreement, shall
be arbitration in Los Angeles,  California,  U.S.A.  before a single  arbitrator
under the auspices of, and in accordance with the commercial  arbitration  rules
of, the American Arbitration  Association.  The single arbitrator shall have the
power to  award  any and all  remedies  and  relief  whatsoever  that is  deemed
appropriate  under  the  circumstances,  including,  without  limitation,  money
damages and equitable relief. The award shall be final, binding and enforceable,
and may be  enforced  by any  court of  competent  jurisdiction.  The  procedure
whereby the evidence (oral and/or  written)  relating to the matter is presented
in the  arbitration  shall be as agreed  to by the  parties  hereto,  and in the
absence of such agreement,  shall be as determined by the arbitrator;  provided,
that each party hereto shall have the right to discovery,  to call witnesses and
to cross-examine  (either through legal counsel,  expert witnesses or both). The
decision of the arbitrator  shall be rendered  within thirty (30) days following
the  conclusion  of  the  arbitration  proceeding,  but in the  event  that  the
arbitrator  does not render an award  within  such period the  arbitrator  shall
nonetheless retain jurisdiction of the matter for the purpose of making an award
as soon as  reasonably  possible.  Such  arbitration  proceedings  shall  be the
exclusive  means to resolve any disputes,  controversies  or claims  between the
parties hereto; provided, however, that either party hereto shall have the right
to seek temporary and/or preliminary injunctive relief in any court of competent
jurisdiction to enjoin  violations of this Agreement pending final resolution of
the controversy in arbitration.


                                       16
<PAGE>

13.10  Attorneys'  Fees. If either party shall bring an action against the other
arising out of or related to this Agreement, the unsuccessful party shall pay to
the  prevailing  party all attorneys'  fees and costs  actually  incurred by the
prevailing party, in addition to any other relief to which it may be entitled.

13.11 Binding Effect. This Agreement and the rights,  covenants,  conditions and
obligations  of the  respective  parties  hereto and any instrument or agreement
executed  pursuant hereto shall be binding upon the parties and their respective
successors, assigns and legal representatives.

13.12  Assignment.  Neurosmith  may not assign or transfer  any of its rights or
obligations  under  this  Agreement.  Small  World may  assign  its  rights  and
obligations  to any of  its  affiliates  or  subsidiaries  without  Neurosmith's
consent.

13.13 Counterparts.  This Agreement may be executed simultaneously in any number
of  counterparts,  each of which  shall be deemed an  original  but all of which
together shall constitute one and the same instrument.

13.14 Severability. In the event that any provision or any part of any provision
of this Agreement shall be void or unenforceable for any reason whatsoever, then
such  provision  shall be stricken and of no force and effect.  However,  unless
such stricken  provision goes to the essence of the consideration  bargained for
by a party,  the remaining  provisions of this Agreement  shall continue in full
force and  effect,  and to the extent  required,  shall be  modified to preserve
their validity.

13.15 No Third Party Rights.  This  Agreement is not made for the benefit of any
third party except for Small World's successors and assign.


                                       17
<PAGE>

13.16  Construction.  The language in all parts of this  Agreement  shall in all
cases be construed simply,  according to its fair meaning,  and not strictly for
or against  any of the parties  hereto.  Without  limitation,  there shall be no
presumption  against any party on the ground that such party was responsible for
drafting this Agreement or any part thereof.

13.17  Limitation  on Liability  and Damages.  In no event shall either party be
liable or responsible for any type of damages other than actual, direct damages.
Without  limiting  the  foregoing,   neither  party  shall  be  liable  for  any
consequential,  special, indirect,  punitive or other type of damage, whether or
not such  party has  knowledge  of any such  other  damages  or facts that would
result in such  damage.  In  addition,  in no event shall  either party have any
liability  for any amounts  which in the  aggregate  exceed the  Purchase  Price
(including  the T&C  Payment),  provided  that the  foregoing  shall  not  limit
indemnification claims under Article 10 with respect to liabilities or claims of
third parties.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

<TABLE>
<CAPTION>
<S>                                                <C>
SMALL WORLD TOYS                                   NEUROSMITH, LLC
A California corporation                           A California limited liability company

By:                                                By:
    ----------------------------------------         -------------------------------------------------

   Debra Fine, Chief Executive Officer               Mark R. Herron, Chief Executive Officer
</TABLE>


                                       18
<PAGE>

                            ASSET PURCHASE AGREEMENT

                                     Between

                             SMALL WORLD KIDS, INC.
                                  as purchaser

                                       and

                                 NEUROSMITH, LLC
                                    as seller

                                     Dated:

                               September 16, 2004

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              Page
<S>                                                                                                            <C>
ARTICLE I         SALE AND PURCHASE OF ASSETS...................................................................1

         1.1      Assets to be Transferred......................................................................1

         1.2      No Other Assets...............................................................................1

         1.3      Title to Purchased Assets.....................................................................1

         1.4      No Assumption of Liabilities..................................................................1

ARTICLE II        PURCHASE PRICE, PAYMENT AND RELATED MATTERS...................................................2

         2.1      Purchase Price; Payment of the Purchase Price.................................................2

         2.2      Tinkers &Chance...............................................................................2

         2.3      Taxes.........................................................................................2

ARTICLE III       CLOSING.......................................................................................3

         3.1      Time and Place................................................................................3

         3.2      Transactions at the Closing...................................................................3

ARTICLE IV        REPRESENTATIONS AND WARRANTIES OF NEUROSMITH..................................................4

         4.1      Organization; Authority; Due Authorization....................................................4

         4.2      No Violation..................................................................................4

         4.3      Regulatory Approvals and Other Consents.......................................................4

         4.4      Title to Tangible Assets......................................................................4

         4.5      Intellectual Assets...........................................................................5

         4.6      Contracts.....................................................................................5

         4.7      Litigation....................................................................................5

         4.8      Applicable Law................................................................................6

         4.9      Representations and Warranties on Closing ....................................................6

ARTICLE V         REPRESENTATIONS AND WARRANTIES OF SMALL WORLD.................................................6

         5.1      Due Incorporation.............................................................................6

         5.2      Authority to Execute and Perform Agreements...................................................6

         5.3      Due Authorization; Enforceability.............................................................6

         5.4      No Violation..................................................................................6

         5.5      Regulatory Approvals..........................................................................7

         5.6      Representations and Warranties on Closing.....................................................7

ARTICLE VI        COVENANTS AND AGREEMENTS OF THE PARTIES EFFECTIVE PRIOR TO CLOSING............................7

         6.1      Business Examinations and Physical Investigations of Assets...................................7

         6.2      Conduct of Business...........................................................................7

         6.3      Arrangements with Employees...................................................................7

         6.4      No Solicitation or Negotiation................................................................7

         6.5      Risk of Loss..................................................................................7

         6.6      Title to Chips and Tooling....................................................................8
</TABLE>


                                       i
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                            <C>
ARTICLE VII       CONDITIONS PRECEDENT TO THE OBLIGATION OF EACH PARTY TO CLOSE.................................8

         7.1      No Action or Proceeding.......................................................................8

         7.2      Governmental and Other Approvals..............................................................8

         7.3      Tinkers & Chance License Agreement............................................................8

ARTICLE VIII      CONDITIONS PRECEDENT TO THE OBLIGATION OF SMALL WORLD TO CLOSE................................8

         8.1      Representations and Warranties................................................................9

         8.2      Performance of Covenants......................................................................9

         8.3      Updated Schedules.............................................................................9

ARTICLE IX        CONDITIONS PRECEDENT TO THE OBLIGATION OF NEUROSMITH TO CLOSE.................................9

         9.1      Representations and Warranties................................................................9

         9.2      Performance of Covenants......................................................................9

ARTICLE X         INDEMNIFICATION...............................................................................9

         10.1     Indemnification by Neurosmith.................................................................9

         10.2     Indemnification by Neurosmith.................................................................9

ARTICLE XI        TERMINATION; REMEDIES........................................................................10

         11.1     Termination Without Default..................................................................10

         11.2     Termination Upon Default.....................................................................11

         11.3     Specific Performance.........................................................................11

         11.4     Attorneys' Fees..............................................................................11

ARTICLE XII       DEFINITIONS..................................................................................11

         12.1     Definitions..................................................................................11

         12.2     Other Defined Terms..........................................................................15

         12.3     Other Interpretive Provisions................................................................15

ARTICLE XIII      MISCELLANEOUS................................................................................15

         13.1     Expenses of Sale.............................................................................15

         13.2     Publicity....................................................................................16

         13.3     Notices......................................................................................16

         13.4     Survival of Representations and Warranties; No Other.........................................16

         13.5     Further Assurances...........................................................................16

         13.6     Amendments...................................................................................16

         13.7     Entire Agreement.............................................................................16

         13.8     Governing Law and Venue......................................................................16

         13.9     Arbitration..................................................................................16

         13.10    Attorneys' Fees..............................................................................17
</TABLE>


                                       ii
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                            <C>
         13.11    Binding Effect...............................................................................17

         13.12    Assignment...................................................................................17

         13.13    Counterparts.................................................................................17

         13.14    Severability.................................................................................17

         13.15    No Third Party Rights........................................................................17

         13.16    Construction.................................................................................18

         13.17    Limitations on Liabilities and Damages.......................................................18

</TABLE>



                                       iii
<PAGE>

                                    Exhibit A

                                Purchased Assets

Products

         1.  Proposed 2004 Products.

         The following Products were proposed to be manufactured and produced by
Neurosmith as its 2004 new Products. These toys were never reduced to production
and exist only in various stages of development. There is no tooling for these
Products. The Intellectual Property Rights in these products are provided only
in the actual stage of development and not as completed Products: (1) Mozart's
Rolling Orchestra; (2) Touch `N Sing Animal Block (3 sets); (3) Pinball Math;
(4) Lingo the Learning Bird; (5) Pet Me Platypus (revised); (6) Together Tunes
Sing-Along Book; (7) Edgar (the Elephant); (8) Abigail (the Alligator") and (7)
a special private version of Sunshine Symphony.

         Prior to the Closing, Neurosmith will provide to Small World all design
documentation, marketing data, electronic engineering documents (including
schematics) and manufacturing data, to the extent those items exist. The design
documents include industrial design, fabric design, decoration design and
packaging design. Industrial design documents may include 2-D and 3-D drawings
to assist in creating tools for injection molding. Marketing data may include
competitive marketing analysis, focus group test reports, play group test
results, budget analysis and detailed schedules. Manufacturing data includes
quotes from manufacturing vendors, cost of goods results, vendor correspondence
and financial analysis. Neurosmith will also deliver preliminary programming
code and original and code level audio recordings to the extent these exist.
(The foregoing deliveries are referred to herein as the "Proprietary Data".)

         Prior to the Closing, Neurosmith will provide Small World with all
existing Prototypes and Models for the above-Products. By Closing, Small World
will be acknowledging that it has received all Prototypes and Models to be
provided by Neurosmith pursuant to this Agreement.

         Except as expressly set forth in Article IV of the Agreement and
subject to the disclaimers in the Schedules hereto, Neurosmith makes no
representations or warranties regarding the foregoing and, without limiting the
foregoing, makes no representation as to the completeness of the Proprietary
Data, the accuracy thereof or whether the programming has any errors. By
effectuating the Closing, Small World will be acknowledging that it is satisfied
that it has done its own review of the Proprietary Data provided and that such
Proprietary Data is sufficient for its purposes and therefore that the
Proprietary Data constitutes full and complete delivery by Neurosmith of
everything regarding the Products that Neurosmith is obligated to provide.
Notwithstanding the foregoing, if Neurosmith later learns of additional
information or data that has not been provided to Small World, Neurosmith will
promptly deliver such additional data and/or information to Small World.

         2. 2003 and Before and Cartridges

<PAGE>

                  a. 2003 Products. The following Products were manufactured and
produced by Neurosmith as its 2003 new Products: (1) Music Blocks Composer; (2)
Music Block Creativity Cartridge; (3) Pet Me Platypus; (4) Grow & Discover
Block; (5) Alphabet Ball; (6) Together Tunes; (7) Musini Preschool; (8)
Magnaphonics; (9) Musini Preschool Quintet Cartridge; and (10) Musini Magic Wand
Set.

                  b. Pre-2003 Products. The following Products were manufactured
and produced by Neurosmith prior to 2003. Those Products that were  discontinued
by 2004 are noted:  (1) Music  Blocks;  (2) Jumbo Music  Blocks  (Discontinued);
Sunshine  Symphony;  (4) Little Linguist  (Discontinued);  and (5) Phonics Tiles
(Discontinued).  (6); (6) Babbler; (7) Little Linguist;  (8) Magic Sensor (i.e.,
Musini Wand) (Discontinued);  (9) Rhythm Roller (Discontinued); and (10) Phonics
Blocks (Discontinued).

                  c. Cartridges. All "Cartridges" for any of the other Products,
such as for Music Blocks,  Jumbo Music Blocks,  Music Blocks  Composer,  Phonics
Tiles,  Together Tunes,  including the following:  Rhythms (Target),  Orchestra,
Jazz  (Target),  Opera,  Bach,  Nutcracker,  Rock  (Target),  Cinderella,  Pooh,
Poppins, World, Kids Classics, Classical.

                  d.  Products.  Wild  Instruments - This line of toys was never
developed past the model stage.

         At or before the Closing, Neurosmith will provide to Small World all
Proprietary Data regarding all of the foregoing Products in a., b. and c. above
(the "Old Products"), to the extent such data exists. It is understood that,
because the Old Products have already been manufactured, some of the Proprietary
Data for the Old Products may no longer remain in Neurosmith's possession (but
may be in the hands of the companies that manufactured such items). On the other
hand, the Proprietary Data for the Old Products may contain additional types of
data, such as purchasing information and sales reports.

      Except as expressly  set forth in Article IV of the  Agreement and subject
to the disclaimers in the Schedules hereto,  Neurosmith makes no representations
or warranties regarding the foregoing and, without limiting the foregoing, makes
no  representation  as to the completeness of the Proprietary Data, the accuracy
thereof or whether the programming has any errors.  By effectuating the Closing,
Small World will be acknowledging  that it is satisfied that it has done its own
review  of the  Proprietary  Data  provided  and that such  Proprietary  Data is
sufficient for its purposes and therefore that the Proprietary  Data constitutes
full and complete  delivery by Neurosmith  of everything  regarding the Products
that  Neurosmith  is obligated to provide.  Notwithstanding  the  foregoing,  if
Neurosmith  later  learns of  additional  information  or data that has not been
provided to Small World,  Neurosmith will promptly  deliver such additional data
and/or information to Small World.

Chips and Other Parts

<PAGE>

Neurosmith  will deliver all of the following  chips and other items.  Except as
set forth in Article IV of the Agreement and subject to the  disclosures  in the
schedule hereto,  Neurosmith makes no representation as to items to be provided,
including as to their condition or the exact quantity.

1. Items believed to be in the possession of Verifan, Ltd.

            a. Roms for Music Block Cartridges, for Mozart, Rhythms,  Orchestra,
Bach, Jazz, Nutcracker,  Opera,  Cinderella,  Pooh, Poppins, Rock, Mozart v.2.0;
OSC for Mozart v.2.0, Controller 3-1 Cart.

            b.  Neurosmith has provided Small World with a "Physical  Inventory"
dated April 1, 2004 from Verifan and an Inventory  Analysis of Neurosmith  dated
as of November 30, 2003.  Neurosmith makes no  representation  as to the correct
amount of such items (i.e.,  how many are part of the Purchased  Assets),  their
condition or any claims or Liens that Verifan may assert.

2. Items believed to be in the possession of Jetta

            a. Roms for Maestro  Edition,  World  Music,  Classical  Collection,
Phonics Tiles, Rock Around the Block,  Maestro (Ed Bulk Pack),  SC615 (Challenge
Cart), Magnaphonics; Together Tunes; I/C for Phonics Tiles (SC614).

            b. Neurosmith has provided Small World with an Inventory Analysis of
Neurosmith dated as of November 30, 2003.  Neurosmith makes no representation as
to the correct  amount of such items (i.e.,  how many are part of the  Purchased
Assets), their condition or any claims or Liens that Jetta may assert.

3. Items believed to be in the possession of Wynnewood

            a. Roms for Quintet, Preschool Favorites, Musini Preschool.

            b. Neurosmith has provided Small World with an Inventory Analysis of
Neurosmith dated as of November 30, 2003.  Neurosmith makes no representation as
to the correct  amount of such items (i.e.,  how many are part of the  Purchased
Assets), their condition or any claims or Liens that Wynnewood may assert.

            c. The  Inventory  Analysis  shows  inventory  for Roms for Sequence
Cartridge.  Neurosmith does not know the present location, if any, of such Roms,
although  Wynnewood was the  manufacturer of that cartridge.  All rights to such
Roms are part of the Purchased Assets, but Neurosmith makes no representation as
to the correct  amount of such items (i.e.,  how many are part of the  Purchased
Assets), their condition or any claims or Liens that Wynnewood may assert.

Miscellaneous Assets

<PAGE>

The URL:  "Neurosmith.com"  and any of the  trade or  service  marks  listed  on
Exhibit  "C" that do not  relate to  Products  that were  actually  produced  or
marketed.

The list of  Purchased  Assets  is  intended  to  cover  all  Products  in which
Neurosmith has any  Intellectual  Property  Rights,  including all  discontinued
Products.  In the event that it is later  determined that there are any Products
not listed,  such Products shall be transferred to Small World as Products under
this Agreement;  however,  Neurosmith makes no representation or warranty of any
nature  whatsoever  about any such Product or any  Intellectual  Property Rights
therein.

<PAGE>

                                   Exhibit "B"

                                Form of Releases

<PAGE>

                                   Exhibit "C"

                 Trademarks and Patents and Patent Applications

                                   Trademarks

      1.    Music   Blocks   -   U.S.   Application   75459420.   Reg.   2545293
            (Supplemental) (No separate registration for Music Block Composer or
            Music Block Creativity Cartridge.

      2.    Pet Me Platypus - U.S. Application 76497493

      3.    Grow & Discover Block - U.S. Application 76570542

      4.    Alphabet Ball - No application

      5.    Together Tunes - U.S. Application 76497490

      6.    Musini - U.S.  Application  76381083  (No separate  application  for
            Musini Preschool or Magic Wand or Preschool Quintet Cartridge)

      7.    Magnaphonics - U.S. Application 76497492

      8.    Phonics Tile - U.S. Application Abandoned (Product Discontinued)

      9.    Jumbo  Music  Block  -  U.S.   Application   2641320  Reg.   2641320
            (Supplemental)

      10.   Sunshine Symphony - U.S Application 78044454. Reg. 2807383

      11.   Little Linguist - U.S. Application 754588875. Reg. 2423716

      12.   Babbler - No application

      13.   Mozart's Rolling Orchestra - No Application and no trademark search

      14.   Touch `N Sing Animal Block (3 sets) - Registration Abandoned

      15.   Pinball Math - No Application and no search

      16.   Lingo the Learning Bird - U.S. Application 76570549

      17.   Together  Tunes  Sing-Along  Book  - No  separate  application  from
            Together Tunes

      18.   Edgar (the Elephant) - No U.S. Application and no search

      19.   Abigail (the Alligator - No U.S. Application and no search

      20.   Smart Toys for Developing Minds - (Tagline) No U.S.  Application and
            no search

      21.   Phonics Block - U.S. Application 75465684; Reg. 2485558

      22.   Magic Sensor - U.S. Application 76449802 - Abandoned

      23.   Touch `N Sing - U.S. Application 76566213

      24.   Rhythm Roller - U.S. Application 76570547

      25.   Cyber Cartridge - U.S Application 75709657; Reg 2621740


Patents and Patent Applications.

U.S. Patent 6,353,168 (March 5, 2000) - Educational Musical Instrument for
Children

U.S. Patent D410,972 (June 5, 1999) - Design for Music Blocks

U.S. Provisional Patent Application Entitled: Interactive Sound Generator

      Application  Serial No.:  60/355,776;  Filing Date:  February 9, 2002,  as
      superceded  by  U.S.  Patent  Application   Entitled:   Interactive  Sound
      Generator
      Application Serial No.: 10/360,416; Filing Date: February 7, 2003

<PAGE>

                              Disclosure Schedules

                                  Schedule 4.4

All  chips  and  tooling  are in the  possession  of  the  manufacturers  of the
applicable products, such as Wynnewood, Jetta and Qualiman.  Although Neurosmith
and Small World have each contacted these manufacturers, it is not clear whether
these  manufacturers  are making any claims that they own or have a lien on such
chips  and/or  tooling,  including  as to whether  they must be paid any amounts
before  Neurosmith  and/or any successor to Neurosmith,  such as Small World may
have  possession  of or title  thereto.  Neurosmith is delivering to Small World
only such title in chips and tooling as Neurosmith  may have,  not including any
claims  that such  manufacturers  may make and such  claims  are  exceptions  to
Neurosmith's  representations  hereunder,  including  those in  Article  IV. The
description of the chips and tooling and the exceptions to  representations  set
forth therein set forth in Exhibit "A" are incorporated herein.

Schedule 4.5

There are no known exceptions.  However,  Neurosmith did not undertake trademark
searches on most proposed names for its 2004 Products

Schedule 4.7

Pierre Belvedere,  Inc.  ("Belvedere"),  a Canadian  distribution  company, has
filed suit in Canada claiming that Neurosmith wrongfully terminated Belvedere as
Neurosmith's  Canadian  distributor.   Neurosmith  is  contesting  this  matter.
Belvedere has claimed damages of between $300,000 and $400,000 Canadian dollars.
This matter should not affect the Purchased  Assets;  Neurosmith shall indemnify
Small World with respect to this matter.

KB Toys of  Massachusetts,  Inc.  ("KB"),  a purchaser of  Neurosmith  Products,
notified  Neurosmith  in a letter dated  August 26,  2004,  that KB, which is in
Chapter  11  Bankruptcy  proceedings  in  Delaware,  is  owed  $125,224.71  as a
pre-petition  claim.  Neurosmith is investigating  this matter,  but its initial
review shows nothing to support this claim. In any event,  the matter should not
affect the Purchased  Assets and Neurosmith  shall  indemnify KP with respect to
such claim.

Schedule 4.8

The Musini Wand may not comply with all FCC requirements.

<PAGE>

7The battery case for an earlier design of Sunshine Symphony was found to permit
the  positive  and negative  contacts to touch in extreme  circumstances,  which
could lead to "warming". This defect was fixed. It is noted that this defect was
reported to the Consumer Protection Safety Commission which did not consider the
defect to be a safety hazard,  because the warming was not enough to cause burns
or start a fire.  Any  liability  relating to the sale of the Sunshine  Symphony
with the earlier design of the battery case remains Neurosmith's, subject to the
indemnification obligations hereunder.

Some Pet Me Platypus products were incorrectly manufactured by Qualiman and were
recalled. While Neurosmith retains any liability for any such products that were
sold by  Neurosmith  prior to the  Effective  Date,  Small World shall have full
responsibility for products sold after the Effective Date.