I'm writing to inform you about the current state of the world commodities market for the types of raw materials that we use in our manufacturing processes. Just to give you an idea of what has been transpiring, the following is what has happened to the cost of our raw materials over the past twelve months:

Tin Lead Alloy+54%       Copper           +45%       

Zinc Alloy      +33%       Iron                +8%          

Aluminum      +11%       Stainless Seel  +18%     

Brass             +22%       Silver              +40%          

Nickel            +84%        Kau(CN)2        +68% ( Potassium Gold Cyanide)              

These increases in basic commodities has also pressured pricing in some of our other raw materials such as; enamel , thinner for enamel  and silk screen ink Etc.

Since Scorpion is an industry leader we have been able to absorb many of these increases and keep pricing to our customers low until the last possible moment. This has allowed us to honor our existing price list, which expires on the 1 March 2004. However after this date we will be forced to increase our prices. At this time I'm not sure of the exact amount of the increase but it should range from between 10%-40%. Our final number is contingent upon what happens in the commodities market during the next couple of months. The recent reorganization of our sales department and efficiency programs we've initiated at the factory will allow us to hold these increases to less than our actual cost.  The result being, even though our prices will be raised, they will most likely be raised by a lower percentage than our competitors will need to.

It's always difficult for me to tell you that we need to raise prices. However, after this latest round of raw material increases you will be able to better compare the total package of what we offer to that of our competitors. It's times like this when you can see first hand the real advantages in working with a company like Scorpion.

Thanks again for your continued support and please don't hesitate to contact me, or any one of my staff if you have and questions or concerns.

Warm regards.