Increase our pricing because of our increased cost.

The details of the increased cost are as follows:

Exchange Rate:
On July 21, 2005 the Yuan (China’s currency) ended a more than ten year fixed
value as compared to the US Dollar.

This exchange rate was 8.28 RMB (Yuan) to $1US. The current exchange rate as of November 26,
2007 is 7.40 RMB per $1US. This means that it takes nearly 12% more US Dollars now than it did two
years ago. But this is not the only factor.

Chinese Tax Rebate: Fireworks Manufacturers in China pay 13% in taxes. In previous years, they
would get a 13% tax rebate on all of the fireworks that were exported. This rebate has been
decreased to 5%, so effectively the fireworks companies are paying 8% in new taxes.

Shipping: Shipping continues to become more complex and expensive every year. It is getting harder
to ship and the price keeps going up. This cost has nearly doubled in the past 4 years. It now can
cost as much as $12,000 for a container of fireworks to be shipped from the factories in China to the
fireworks companies in the US.

Cost of materials and labor: As with many places around the world, the cost of raw materials and
labor are increasing, including China. As China’s economy and standard of living is rapidly increasing,
it is harder and more expensive for fireworks companies to purchase the raw materials that they need
as they are competing with many other industries. Labor is also becoming harder to obtain as there
are more opportunities for workers and many do not want to work at a fireworks factory when they
have opportunities to work in cleaner and less hazardous places.

Fireworks Classification Changes: 10” and larger shells are now classified as 1.1G fireworks. This
makes it very expensive, if even possible to import these from China. Many companies will no longer
be directly importing large shells and/or will share one container of large shells among multiple
companies. This may even spur US manufactures to start building more large shells.

Together, all of these issues are causing the fireworks pricing to increase significantly in a short
amount of time. Some of these costs may continue to rise, and some may remain about where they
are, however, we will never again see prices as low as we have in the past.

Thanks for your understanding and your support.