Dear Friends,

Over the past 15 years, we've designed, created, and developed some of the best-selling novelty products in the world. Our mission statement has always remained the same - to give you great products at a fair price. We'd like to take this opportunity to thank all of you for your continued support. We know that great customers are the key to our success, and we're diligently working to improve our service, company image and marketing strategy. We're committed to doing everything it takes to increase sales for all of us, and we'll continue to move with the times and exceed your expectations.

2007 has been an incredible year for Pipedream. In July, we introduced BASIX, our 100% phthalate-free rubber line with over 50 styles of dongs and 8 different colors to choose from. We've built a state-of-the-art rubber manufacturing facility in-house, with the capacity to produce over 5000 units per day. In addition, we're in the process of automating our entire facility by implementing cutting edge software and computer systems. The results have been phenomenal - we had our best show ever and the customer response has been tremendous. Our Fetish Fantasy Series is the hottest-selling fetish line on the market, and it continues to raise the bar for couples-friendly fetish gear.

In April, our best-selling Moist lube was recognized by Women's Health magazine as the "Best Personal Lubricant," adding to the impressive list of accomplishments Pipedream has earned over the years. We won a fourth and fifth NACD award for our Lover's Cocktail custom bottles, awarded to the company with the most unique packaging. The accolades continue to pile up!

Our collection of designer handbags is still the talk of the town - they're all-in-one kits packaged in stylish bags and designed to make sales soar. From bachelorette essentials to Rabbits in the Hat, our bags are redefining the way kits and collections are packaged and sold. Ask your sales person for the bag that's right for you...we stock them deep for every occasion!

The future is now and Pipedream is striving to find the best gifts, gags, lotions, vibes and novelties around the world. Come along for the ride and see what the BUZZ is all about. We don't make the orgasm...we make the orgasm BETTER!

Yours Truly,

Nick Orlandino

Chief Operating Officer