FORWARD LOOKING STATEMENTS

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2 FORWARD LOOKING STATEMENTS All statements in the following presentations regarding possible events, conditions or results of operations that are based on assumptions about future economic conditions and courses of action constitute "forward-looking information". These statements represent the Corporation's intentions, plans, expectations and beliefs. In certain instances, these statements require us to make assumptions and there is significant risk that these assumptions may not be correct. Furthermore, these statements are subject to risks, uncertainties and other factors, many of which are beyond the Corporation's control. Actual results could differ materially from the statements reflected in the forward-looking information. When we say that we expect the net effect of our value enhancement plan will be to achieve a certain level of EBITDA by fiscal 2009, we have assumed that we will be able to successfully realize synergies, by improving our distribution efficiencies through the consolidation of distribution facilities in one location, eliminating under performing SKUs, launching manufacturing, operating and administrative efficiency initiatives. When we say that we will be able to add EBITDA growth over the next two years, we assume that we will be successful in continuing the sales and EBITDA growth of our Toy business and our Activities and Stationery business at forecast rates and improving margins on new products and that the retail markets into which we sell will continue to demonstrate strong demand for the Corporation's existing and new product lines, that MagNext will be positively received by the marketplace, that we will be able to recapture historic sales and profitability levels in this category, that we will maintain or increase the quality of products manufactured in new locations, that we will be successful in reducing inventory levels, that we will maintain service levels in our new distribution facility, that we will be able to attract and retain key personnel in key positions, that international markets that we service through our sales and marketing organization will have an interest in the ROSE ART brand and in other products that we will offer, that product recalls and negative publicity do not materially affect sales, that our insurers will not successfully deny any material portion of the claims, that any such portion which may be denied will be recoverable against former shareholders of MEGA Brands America and that the number and quantum of self-insured product liability claims will not be material. We when we say that we expect our 2007 inventory to be in the $ million range, we have assumed that the retail markets into which we sell will continue to demonstrate strong demand for the Corporation's product lines and that we do not expect any material future inventory reevaluations. When we state that we expect to reduce our debt over the next two quarters, we have assumed that we will be able to reduce the levels of inventory and receivables. When we say that we expect to meet our bank covenants over the next quarters, we have assumed that we will generate sufficient EBITDA and maintain appropriate levels of debt to meet the required covenants. We intend to provide updates in relation to the foregoing expected results on a quarterly basis in our management's discussion and analysis accompanying our financial statements. Additional information about the factors that could cause actual results to differ from our current expectations and the material factors and assumptions relating to the forward-looking information can be found in the "Forward-Looking Statements" and "Risks and Uncertainties" sections of the Management s Discussion and Analysis for the year ended December 31, 2006 as updated the Management s Discussion and Analysis for the third quarter ended September 30, 2007 as filed on SEDAR. The words "believe", "estimate", "expect", "intend", "anticipate", "foresee", "plan", and similar expressions and variations thereof, identify certain of such forward-looking statements, which speak only as of the date on which they are made. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable legislation. Attendees are cautioned not to place undue reliance on these forward-looking statements.

3 MEGA Brands Investor and Analyst Day December 11, 2007

4 The State of the Business A 40 Year Track-Record of Innovation Critically acclaimed creative, cutting edge, innovative products Profitable every year until 2007 Sales and distribution network that reaches over 100 countries

5 The State of the Business 5-Year Sales: Our Challenges Magnetix Rose Art Integration China (LTM)

6 State of the Business Magnetix: EBITDA CONTRIBUTION (Millions) TOYS AST MAGNETIX Admin Total Pro-Forma Adjusted Adjusted

7 The State of the Business Rose Art Integration: 32M Q3 Charge 12M: Inventory Sold Below Cost 20M: Inventory Reserve Two Distribution Centers Closing One Plant Closure JAN 2007 $140M Transition from Magnetix to Magnext DEC 2007 $90-$100M

8 The State of the Business China: $15M Late Deliveries Increased Lead Time in Customer Deliveries Vendor Issues Inspections, Customs Safety

9 THE VALUE ENHANCEMENT PLAN

10 The State of the Business Challenges: Rose Art Integration Rose Art surplus, supply chain, Inventory, demand management China: $15 million of orders not shipped (one week of Q3 sales) due to offshore delays, vendor issues Magnetix: How can we realize category potential and lost gross margin opportunities? Solutions: Operations and Supply Chain On-time Deliveries Improved Integration Better Supply and Demand Management Efficiencies: Distribution Manufacturing Productivity Products and Customers: Margin Improvement Magnext

11 Value Enhancement Plan Operations & Supply Chain Objective: Global Operational Excellence Key Goals: On-time Deliveries At High Fill Rates Increase Inventory Velocity To 4-5x Turns Per Year Key Actions Vendor Management Asian/North American Integration Supply and Demand Management

12 Value Enhancement Plan Operations: On-Time Deliveries Action: Improved Vendor Management Vendor Capacity Planning No Consigned Parts Consolidating Vendor Base 95% Vendor To Performance Schedule Policy Subcontracting Standards

13 Value Enhancement Plan Operations: Improve Asian/North American Integration Action: Improved Execution Mind And Management In Asia More Volume In Own Facility Quality Assurance Program

14 Value Enhancement Plan Operations: Supply and Demand Management Action: Increase Inventory Velocity and Fill Rates Upgraded Systems and Processes More Direct/FOB Business Sales and Operations Planning

15 Value Enhancement Plan Project $12M in Efficiencies Annualized Savings Expected Expected One-Time Costs Distribution Center Synergies Q SKU Optimization Q Manufacturing Synergies Q Operational/Admin. Synergies Q1/Q

16 Value Enhancement Plan Product & Customers Goal Grow Toy EBITDA 5-7% annually Grow AST EBITDA 3-5% annually Launch MagNext and regain lost EBITDA Action New Product Innovation Margin Improvement Program International Markets

17 Broad Market Potential Basic Construction Preschool Construction 15.31% Magnetic Construction 14.82% MEGA SHARE: 93% Category Leader

18 The Results Value Enhancement = $105-$115M EBITDA $ $83 $12 $10-20 Q Efficencies Growth 2009 EBITDA

19 EXECUTION

20 Addressing Execution Goal: Flawless Execution Action: A Restructured Organization New Chief Operations Officer Vic Bertrand Named Chief Innovation Officer Top Management Compensation

21 Addressing Execution Our Scorecard On-time Deliveries Inventory Velocity Vendor Performance Efficiencies Margin Improvement EBITDA

22 Historical Financial Review December 11, 2007

23 Reconciliation of Adjusted EBITDA (in thousands) Historical Financial Review $90,000 $80,000 $70,000 $60,000 $19,978 $15,413 $8,303 $8,278 $446 $83,355 $36,012 $50,000 $48,958 $40,000 - $18,021 $30,000 $20,000 $10,000 $0 EBITDA Excluding Adjustments Magnetix Inventory Product Revaluation Recall and other changes Sales below Cost Integration Expenses Litigation Expenses Other $44,591 Adjusted EBITDA LTM to September 30th, 2007 * The term EBITDA does not have any standardized meaning according to Canadian generally accepted accounting principles (GAAP). It is therefore unlikely to be comparable to similar measures presented by other companies.

24 Historical Performance Historical Financial Review Adjusted Sales vs. Adjusted Gross Margin Adjusted EBITDA vs. Adjusted EBITDA Margin $600,000 $500,000 $400,000 $300,000 $200,000 $100, % 215, % 384, , , % 40.5% 45.0% 44.0% 43.0% 42.0% 41.0% 40.0% 39.0% $120,000 $100,000 $80,000 $60,000 $40,000 $20, % 44, % 77,188 97, % 83, % 25.0% 20.0% 15.0% 10.0% 5.0% $ LTM Sept. ' % $ LTM Sept. '07 0.0% Higher net sales in 2006 compared to 2005 due to the inclusion of Rose Art for the full year compared to 5 months in 2005 Reduced gross margin due to additional freight costs incurred in order to meet customer deadlines for the delivery of redesigned Magnetix products, higher magnet costs and lower manufacturing efficiencies

25 Historical Performance Historical Financial Review Adjusted Net Sales (Millions) Toys December 31, LTM September 30, Magnetix Activities/ Stationery

26 Historical Performance Historical Financial Review Capex and Free Cash Flow Capex * Free Cash Flow * $25,000 $20,000 17,456 20, 269 $90,000 $80,000 $70,000 67,211 80,278 63,086 $15,000 $10,000 7,201 9,977 $60,000 $50,000 $40,000 $30,000 36,993 $5,000 $20,000 $10,000 $ LTM Sept. '07 $ LTM Sept. '07 *Capex excludes acquisitions *Free cash flow = EBITDA - Capex Capital expenditures have increased between 2005 and 2006 due to the inclusion of Rose Art for the full year compared to 5 months in 2005 Capex is 3% to 3.5% of sales, mainly related to new product initiatives MEGA Brands continues to demonstrate strong free cash flows

27 Q Results Historical Financial Review Three months ended September 30 ($ thousands) Net sales* Gross profit* Gross margin* ,909 67, % ,778 90, % 1. Decrease in net sales due to production delays in Asia that resulted in at least $15 million of orders not shipped as well as lower shipments of Magnetix products. 2. Strong demand for toys, particularly pre-school toys with Dora, Go Diego Go, and Cars. 3. Gross margin down driven by lower margins on Magnetix and lower manufacturing efficiencies. * Before sale of excess inventory and non-cash inventory revaluation adjustment

28 Q Results Historical Financial Review ($ thousands) Three months ended September ($ thousands) Three months ended September Toys 111, ,522 North America 117, ,862 Stationery & Activities 72,543 75,256 International 66,390 59,916 Toys Growth in Preschool Magnetix down $16 million Stationery & Activities Growth in Activities Stationery down due to lower BTS 17% decline in North America 11% growth in International

29 Q Results Historical Financial Review (In Millions) Stationery & Activities Magnetix & Toys Sale of Excess Inventories (1) $11.0 $4.0 $15.0 Inventory Revaluation Adjustment (2) $11.0 $9.0 $20.0 1) In anticipation of plant closures, higher levels of inventories were built in ) Non-cash revaluation adjustment to minimize future impact related to the completion of our integration plans and potential impact on transition to MagNext.

30 Recall and Litigation Update

31 Litigation Update Magnetix Insurance Costs of insuring old Magnetix product prohibitive Current coverage continues to exclude incidents occurring after December 1, 2006 involving Magnetix products manufactured prior to May 1, 2006 Appropriately insured for all other product liability issues, including new Magnetix products currently on shelves

32 Litigation Update Magnetix Litigation Update Settled 4 lawsuits and 10 claims Aggregate cost = $13.5 million Recovery of $13.5 million from insurers and other recourses First payment of $1 million received in April 2007 Second payment of $2.6 million received in September 2007 Primary limits exhausted Discussions ongoing with excess insurers Coverage confirmed for 2 of the 3 pending lawsuits Company aware of 15 other reports of incidents

33 Litigation Update Earn-Out Litigation Rosen lawsuit against MB in the Southern District of New York: payment of the contingent purchase price MEGA Brands defence and counterclaims Reserve of $51 million on balance sheet Recovery of Magnetix expenses $15M escrow fund provided for in SPA Discovery ongoing Trial expected in late 2008 or early 2009

34 Litigation Update Employment Arbitration Arbitration proceedings seeking damages for alleged breach of employment agreements Jeffrey Rosen s arbitration scheduled to begin mid-december 2007 Decision expected to be rendered in Q1-08 Lawrence Rosen s arbitration scheduled for March 2008 No additional reserves have been taken for these arbitrations

35 Capital Structure and Bank Covenants

36 Capital Structure Dec 31, 2006 March 31, 2007 June 30, 2007 Sept 30, 2007 Capital Structure $ % $ % $ % $ % Cash Debt Revolving Credit Facility % % % % Term Loan A % % % % Term Loan B % % % % Capital Leases % % % % Total Debt % % % % Book Equity % % % % Total Capitalization % % % % Key Credit Statistics Total Debt-to-EBITDA 3.11x 3.49x 4.10x 4.06x Fixed Charge Coverage Rates 1.52x 1.85x 1.67x 1.47x

37 Bank Covenants Fixed Charge Coverage These covenants must be maintained on the last day of each fiscal quarter Credit Agreement allows: Issuance of a second-lien facility not exceeding $75M Liens securing obligations under factoring agreements relating to the sale of accounts receivable not exceeding at any time 25% of the aggregate amount of all accounts receivable of the Company. Such liens would not be considered to be Funded Debt.

38 Principal Repayments of Term Debt Revolving Credit Facility of $120M maturing in July 2010 No penalties if prepayment of Term Debt

39 Expectations on Bank Covenants The Company generates strong free cash flows which will be allocated to debt reduction Low capital expenditure requirements Almost no cash paid taxes $100M of cash flows coming from goodwill deductibility over 15 years Minimal Debt Repayments Current credit agreement provides the flexibility to address any short term tightness on covenants Over the next two quarters, we expect to reduce our borrowings under the revolving credit facility due to collection of receivables following high by season Need to monitor transition of Magnetix to Magnext and understand impact on profitability Current expectations are that bank covenants will be met

40 Strategies for Growth

41 Three Growth Priorities Brand: Portfolio Optimization Innovation: Infrastructure & MEGA Design Partnerships: Customers & Content

42 Brand: Portfolio Optimization Company MEGA Brands Super Brands by MEGA Brands by MEGA Brands by MEGA Brands All Things Construction All Things Art Material School Supplies & Craft Kits All Things Presentational & Writing Product Lines Construction Aisle Children's Art Aisle Stationery Dept Toy Dept Product Lines Children 1-5yrs. Maxi & Mini Boys 6+ Neo Shifters Struxx Dragons Plasmaverse Pro Builder MagNext Parent SmART ColorStart Pix Teacher Kids Color Blasts Fuzzy Home School Office Board Dudes SRX USA Gold Activities Games & Puzzles Girls Things You Build Things You Create Things You Present & Write With Things for Creative Play

43 Brand: Portfolio Optimization Marketing Efficiency Synergy by leverage Super Brand spending Merchandise adjacency drives consumers traffic SKU Optimization Improved turns Lower variable R&D expense

44 Innovation: Infrastructure and MEGA Design New Leader for Toy Brand Teams New Leader for Art Materials Global Innovation Team Consumer Research Team International Design Center Investments in Design Technology, Personnel

45 Partnerships: Customers and Licensors Customers Strong Relationships With The World s Largest Retailers Stronger Focus On Sales in USA Licensors Leveraging Content Across Multiple Categories New Licensing Director

46 Thank You