Document:

EXHIBIT 10.7

                             SECURED PROMISSORY NOTE
                             -----------------------

$150.000.00                                                   September 20, 2000
-----------                                               Costa Mesa, California

     For  value  received,  the  undersigned,  TNR  DEVELOPMENT  CORPORATION,  a
California corporation ("Maker"), promises to pay to AMERICAN INFLATABLES, INC.,
a  Delaware  corporation  ("Payee"),  the  principal  sum of One  Hundred  Fifty
Thousand Dollars ($150,000.00), with interest rate and terms as follows:

     1. MATURITY DATE. This Note shall mature on the date which is one year from
the date set forth above (the "Maturity  Date").  All outstanding  principal and
interest on this Note shall be due and payable on the Maturity Date.

     2. INTEREST.  The rate of interest on the outstanding  principal balance of
this Note shall be six per cent (6%) per annum or portion thereof, commencing as
of the date of this Note.

     3. PAYMENTS.  Maker shall make the payment due hereunder,  as and when due,
to Payee at 947 Newhall Street, Costa Mesa, CA 92627 or at such other address as
Payee may, from time to time,  designate in writing.  All payments made by Maker
hereunder  shall be  applied  first to  accrued  but  unpaid  interest,  and the
remainder to principal. All payments shall be made in lawful money of the United
States of America.

     4.  ATTORNEYS'  FEES.  If any  action at law is  necessary  to  enforce  or
interpret  the terms of this Note,  the  prevailing  party  shall be entitled to
reasonable attorneys' fees.

     5. PREPAYMENT.  This Note maybe prepaid in whole or in part without penalty
at any time prior to the maturity  thereof.  Any  prepayments  shall be credited
fast  against  accrued but unpaid  interest on the  outstanding  principal,  and
thereafter against outstanding principal.

     6.  SECURITY.  Payment of this Note is secured  by the  provisions  of that
certain  Security  Agreement of even date  herewith and by and between Maker and
Payee.  In  amplification  thereof,  as  total  security  for  the  payment  and
performance  of its  obligations  to Payee under this Note,  it is the intent of
Maker to  pledge  and to grant  to  Payee,  and to  collateralize  and  create a
security  interest in that portion,  and that portion only, of the  "Collateral"
(as  defined  in the  Security  Agreement)  which  may  be  necessary  to  fully
extinguish any and all debts,  obligations  and liabilities of Maker arising out
of the Promissory Note.  Maker's debts,  obligations and liabilities  under this
Note shall be without recourse as to Maker, Maker shall have no debt,  liability
or obligation under

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this Note beyond or in excess of Payee's recourse to the Collateral,  arid Payee
shall therefore have recourse only to the Collateral in the event of any default
by Maker under the terms of this Note.

 "Maker"

TNR Development Corporation, a California corporation .

         /s/ Timothy N. Roberts
         ----------------------------
         Timothy N. Roberts
         PresidentEXHIBIT 10.8

                               SECURITY AGREEMENT
                               ------------------

                  This SECURITY  AGREEMENT  ("Security  Agreement")  is made and
          effective as of the 20' clay of  September,  2000,  by and between TNR
          DEVELOPMENT  CORPORATION,  a California corporation  ("Pledgor"),  and
          AMERICAN INFLATABLES,  INC., a Delaware corporation ("Secured Party"},
          with reference to the following:

                                    RECITALS
                                    --------

     A.  Dated  concurrently  herewith,  Pledgor as  "Maker"  made that  certain
SECURED PROMISSORY NOTE (the "Promissory Note") in the original principal sum of
One Hundred Fifty Thousand Dollars  ($150,000.00).  Secured Party is the "Payee"
of the Promissory Note.

     B. Pledgor owns Six Hundred  Thousand  (600,000)  shares of $.001 par value
per share of common stock issued by Secured Party to Pledgor (the  "Collateral")
in consideration of its receipt of the Promissory Note.

     C.  The  loan  evidenced  by  the   Promissory   Note  was  made  with  the
understanding that it would be non-recourse except as to a collateral assignment
by  Pledgor of that  portion  of the  Collateral  which is  necessary  to secure
payment  Pledgor's  obligations  under  the  Promissory  Note and this  Security
Agreement.

     D. In furtherance of that objective,  as total security for the payment and
performance of its  obligations  to Secured Party under the Promissory  Note and
this Security  Agreement,  it is the intent of Pledgor to pledge and to grant to
Secured  Party,  and to  collateralize  and create a security  interest  in that
portion,  and that portion  only,  of the  Collateral  which may be necessary to
fully  extinguish  any and all debts,  obligations  and  liabilities  of Pledgor
arising  out of,  connected  with or  related  to the  Promissory  Note and this
Security Agreement (the "Obligations").

     E. In  amplification  of the  foregoing,  the parties intend that Pledgor's
obligations  under the  Promissory  Note and this  Security  Agreement  shall be
without  recourse as to Pledgor,  that Pledgor shall  therefore have no monetary
liability or obligation  beyond or in excess of Secured Party's  recourse to the
Collateral,  and  that  the  Secured  Party  shall  have  recourse  only  to the
Collateral  in the  event of any  default  by  Pledgor  under  the  terms of the
Promissory Note or this Security Agreement.

     NOW,  THEREFORE,  in consideration of the above Recitals and for other good
and  valuable  consideration,  the  receipt  and  adequacy  of which are  hereby
acknowledged, Secured Party and Pledgor hereby agree as follows:

     1. GRANT OF SECURITY INTEREST. Pledgor hereby pledges and grants to Secured
Party a  security  interest  in that  portion,  and that  portion  only,  of the
Collateral which may be necessary to fully extinguish the Obligations.

                                        1

<PAGE>

     2. COLLATERAL.  The Collateral  shall also include,  but not be limited to,
all  proceeds  thereof.  For  purposes  of this  Security  Agreement,  the  term
"proceeds"  includes whatever is receivable or received when Collateral is sold,
collected,  exchanged or  otherwise  disposed of,  whether such  disposition  is
voluntary  or  involuntary,  and  includes,  without  limitation,  all rights to
payment with respect to the Collateral.

     3.  REPRESENTATIONS AND WARRANTIES.  Pledgor hereby represents and warrants
that:

          A. All information heretofore, herein or hereafter supplied to Secured
     Party by or on behalf of  Pledgor  with  respect to the  Collateral  is and
     shall be true and correct.

          B.  Pledgor and Secured  Party have each  carefully  read and reviewed
     this Security  Agreement and the Promissory  Note,  understands each fully,
     and have had an  opportunity to review each of them with an attorney of its
     or his choice prior to executing this Security Agreement.

          C. None of the  representations  and warranties made by Pledgor herein
     contains any untrue statement of a material fact.

     4.  COVENANTS OF PLEDGOR.  In addition to all covenants  and  agreements of
Pledgor set forth in the Promissory Note, which are incorporated  herein by this
reference, Pledgor hereby agrees:

          A. To do all  acts  that  may be  reasonably  necessary  to  maintain,
     preserve and protect the Collateral.

          B. Not to use or permit any  Collateral to be used in violation of any
     provision of this Security Agreement or any applicable statute,  regulation
     or ordinance covering the Collateral.

          C. To  pay,  or  cause  to be  paid  promptly  when  due,  all  taxes,
     assessments,  charges, encumbrances and liens now or hereafter imposed upon
     Pledgor and affecting any Collateral.

          D. To notify Secured Party  promptly of any change in Pledgor's  place
     of residence-or business.

          E. To procure, execute and deliver from time to time any endorsements,
     assignments,  financing statements,  and other writings deemed necessary or
     appropriate by Secured Party to perfect,  maintain and protect its security
     interest hereunder and the priority thereof.

          F. To account fully for and promptly  deliver to Secured Party, in the
     form received, all proceeds, and, until so delivered, all proceeds shall be
     held by Secured  Party in trust for Secured  Party,  and  identified as the
     property of Secured Party.

                                        2

<PAGE>

     5.  DEFAULT AND  REMEDIES.  Pledgor  shall be deemed IN DEFAULT  UNDER THIS
SECURITY  AGREEMENT UPON PLEDGOR'S FAILURE TO COMPLY WITH THE PROVISIONS of this
Security  Agreement  or the  Promissory  Note (an "Event of  Default").Upon  the
occurrence of any such Event of Default,  Secured Party may, at its option,  and
in  addition to all rights and  remedies  available  to Secured  Party under the
Promissory Note, do any one or more of the following:

          A. Foreclose on the Collateral or otherwise endorse Pledgor's security
     interest in any manner permitted by law.

          B. Sell or otherwise  dispose of the  Collateral at one or more public
     sales,  whether of not such Collateral is present at the place of sale, for
     cash or credit  or future  delivery,  on such  terms and in such  manner as
     Secured Party may reasonably determine.

          C. Retain Pledgor's right, title and interest in the Collateral in its
     own name and for its own benefit.

     6.  CUMULATIVE  RIGHTS.  The rights,  powers and remedies of Secured  Party
under this  Security  Agreement  shall,  in addition  to all rights,  powers and
remedies  given to Secured  Party by virtue of any  statute  or rule of law,  be
cumulative and may be exercised  concurrently  without impairing Secured Party's
security interest in the Collateral.

     7. WAIVER. Any forbearance, failure or delay by Secured Party in exercising
any right,  power or remedy  hereunder  or under the  Promissory  Note shall not
preclude the further exercise thereof.

     8. BINDING UPON SUCCESSOR.  All rights of Secured Party under this Security
Agreement  shall inure to the benefit of its  successors  and  assigns,  and all
obligations of Pledgor shall bind its successors and assigns.

     9.  ENTIRE  AGREEMENT:   SEVERABILITY  This  Security   Agreement  and  the
Promissory Note contains collectively the entire agreement between Secured Party
and  Pledgor.  If  any of the  provisions  of  this  Security  Agreement  or the
Promissory Note shall be held invalid or unenforceable,  this Security Agreement
and the Promissory Note shall be construed as if not containing those provisions
and the rights and obligations of the parties hereto shall continue unabated.

     10. REFERENCES. The singular includes the plural.

     11. CHOICE OF LAW. This Security Agreement shall be construed in accordance
with and governed by the laws of the State of California,  and, where applicable
and  except as  otherwise  defined  herein,  terms  used  herein  shall have the
meanings given them in the California Uniform Commercial Code.

                                        3

<PAGE>

     12. NOTICE. Any written notice, consent or other communication provided for
in this Security  Agreement  shall be delivered or sent by certified  U.S. mail,
with postage prepaid to the following addresses:

              As to Pledgor:

              TNR Development  Corporation 130 McCormick  Avenue,  Ste 104 Costa
              Mesa CA 92626

              Attn: Timothy N. Roberts

              As to Secured Party:

              American Inflatables, Inc.
              947 Newhall Street
              Costa Mesa, CA 92627

Such addresses may be changed by written notice given as preceded herein.

     13. ESSENCE OF TIME. Time is of the essence of this Security Agreement.

"Secured Party"                                  "Pledgor

American Inflatables, Inc.,                      TNR Development Corporation,
a Delaware corporation                           a California corporation

                                                 /s/ Timothy N. Roberts
----------------------------                     -----------------------------
By:  Gregory Mulholland                          By:  Timothy N. Roberts
        President                                        President

                                        4

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