UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q

FORM 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended: March 31, 2010

	or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from: _____________ to _____________

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2009
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____________ to _____________

SCORPION PERFORMANCE, INC.
(Name of Small Business Issuer in its Charter)


Florida	000-52859	65-0979606
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification No.)

3000 SW 4th Avenue, Fort Lauderdale, Florida 33315

(Address of Principal Executive Office) (Zip Code)

(954) 779-3600

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


	Large accelerated filer o	Accelerated filer o

	Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule ~~12b~~ 1 2b-2 of the Exchange Act).

o Yes x No

As of ~~September~~April 30, ~~2009~~2010, there were 36,~~209~~149,~~788~~955 shares of common stock issued and outstanding.

PART I —FINANCIAL INFORMATION		3	3
ITEM 1.	FINANCIAL STATEMENTS	~~FINANCIAL STATEMENTS~~3	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~	18
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	30
	RESULTS OF OPERATIONS	17
ITEM 4T.		CONTROLS AND PROCEDURES	30
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25
PART II – OTHER INFORMATION			31
ITEM 4T.	CONTROLS AND PROCEDURES	25
ITEM 1.		LEGAL PROCEEDINGS	31
PART II - OTHER INFORMATION		26
ITEM 1A.		RISK FACTORS	31
ITEM 1.	LEGAL PROCEEDINGS	26
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	31
ITEM 1A.	RISK FACTORS	26
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES	32
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	27
ITEM 4.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	32
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	27
ITEM 5.		OTHER INFORMATION	32
ITEM 4.	OTHER INFORMATION	27
ITEM 6.		EXHIBITS	32
ITEM 5.	EXHIBITS	27

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Table of Contents

PART I—FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

SCORPION PERFORMANCE, INC. ~~and~~AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30, 2009			December 30 2008
	March 31 2010			December 31 2009
	(Unaudited)			~~(Audited)~~
ASSETS
Current Assets:
Cash and cash equivalents	$	~~155~~208,~~661~~071		$	~~297~~13,~~838~~524
Accounts receivable		~~321~~446,~~616~~298			~~182~~266,~~541~~106
Inventories		1,~~418~~285,~~426~~239			1,~~336~~391,~~322~~103
Other current assets		~~172~~41,~~586~~313			~~328~~35,~~582~~770
Total current assets		21,~~068~~980,~~289~~921			21,~~145~~706,~~283~~503
Property and Equipment, net		710,~~979~~005,~~308~~111			710,~~577~~086,~~717~~414
Total Assets	$	10,047,597		$	9,723,000
Other assets		8,869
Total Assets	$	11,994,901		$	11,792,917
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	~~422~~424,~~384~~921		$	~~477~~446,~~302~~266
Notes payable-current portion		505,~~338~~337			~~413~~505,~~640~~337
Total current liabilities		~~927~~930,~~722~~258		$	~~890~~951,~~942~~603
Notes Payable, net of current portion		13,~~486~~440,~~824~~976			13,~~272~~463,~~873~~900
Total liabilities		24,~~414~~371,~~546~~234			24,~~163~~415,~~815~~503
Commitments and Contingencies		—			—
Stockholders’ Equity:
Preferred stock, par value $.0001 per share, 10,000,000 shares authorized, none issued and outstanding at September 30, 2009 and December 31, 2008, respectively		—			—
Series A 10% Convertible Preferred stock, par value $.0001 per share, 1,500,000 shares authorized, 215,695 and 253,690 issued and outstanding at December 31, 2009 and March 31, 2010, respectively.		—			—
Common stock, par value $.0001 per share,100,000,000 shares authorized, 36,209,788 and 36,039,670 issued and outstanding at September 30, 2009 and December 31, 2008, respectively		3,621			3,604
Series B Convertible Preferred stock, par value $.0001 per share, 500,000 shares authorized, -0- issued and outstanding at December 31, 2009 and March 31, 2010.		—			—
Preferred stock, subscriptions		1,417,200
Common stock, par value $.0001 per share, 100,000,000 authorized, 36,174,455 and 36,163,318 issued and outstanding at December 31, 2009 and March 31, 2010, respectively.		3,617			3,618
Additional paid in capital		19,298,895			19,438,493
Preferred stock, subscriptions		3,016,422			2,156,947
Additional paid in capital		18,673,550			19,006,974
Treasury stock, at cost, 10,000,000 shares		(2,500,000	)		(2,500,000	)
Accumulated deficit		(1011,~~586~~569,~~665~~921	)		(911,~~382~~290,~~912~~125	)
Total stockholders’ equity		7,~~633~~623,~~051~~668			7,~~559~~377,~~185~~414
Total Liabilities and Stockholders’ Equity	$	1011,~~047~~994,~~597~~901		$	911,~~723~~792,~~000~~917

~~See accompanying notes to the financial statements.~~3

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SCORPION PERFORMANCE, INC. ~~and~~AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS~~(Unaudited)~~

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31
	2009			2008			2009			2008
	2010			2009
Revenues, net	$	677,567		$	689,050		$	2,211,540		$	2,416,786
	(Unaudited)			(Unaudited)
Cost of sales		378,991			572,957			1,376,579			1,611,472
Revenues, net	$	1,023,052		$	754,735
Gross profit		298,576			116,093			834,961			805,314
Cost of sales		(563,414	)		(516,993	)
Expenses:
Gross profit		459,638			237,741
Selling and marketing expenses		121,276			208,506			404,886			598,898
Expenses:
Research and development		30,159			32,556			90,774			128,749
Selling and marketing expenses		126,561			127,190
Salaries and employee benefits		126,177			98,229			377,353			314,684
Research and development		33,803			32,296
General and administrative		332,028			361,212			1,060,918			1,234,825
Salaries and employee benefits		125,581			98,038
Total expenses		609,640			700,503			1,933,931			2,277,156
General and administrative		433,842			424,156
Other Income (Expense)
Total operating expenses		719,786			681,680
Interest income		438			3,171			1,883			20,594
Loss from operations		(260,148	)		(443,939	)
Interest expense		(32,475	)		(32,803	)		(91,666	)		(44,479	)
Other income (expense)
Lawsuit settlement		—						(15,000	)		(75,000	)
Rental Income		55,565
Total other income(expense)		(32,038	)		(29,632	)		(104,783	)		(98,885	)
Interest income		12			780
Net loss	$	(343,102	)	$	(614,042	)	$	(1,203,753	)	$	(1,570,727	)
Interest expense		(75,224	)		(29,677	)
Weighted average shares outstanding - Basic and Diluted		36,208,955			35,372,665			36,162,771			34,629,747
Total other income(expense)		(19,647	)		(28,897	)
Loss per share - Basic and Diluted	$	(0.01	)	$	(0.02	)	$	(0.03	)	$	(0.05	)
Net loss	$	(279,795	)	$	(472,836	)
Weighted average shares outstanding - Basic and Diluted		36,172,475			36,095,700
Loss per share - Basic and Diluted	$	(0.01	)	$	(0.01	)

~~See accompanying notes to the financial statements.~~4

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SCORPION PERFORMANCE, INC. ~~and~~AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS~~(Unaudited)~~

	Nine Months Ended September 30,
	Three Months Ended March 31
	2009			2008
	2010			2009
Cash Flows From Operating Activities:
Net loss	$	(1279,~~203,753~~795	)	$	(1472,~~570,727~~836	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		~~430~~197,~~099~~164			~~432~~167,~~746~~517
Changes in Operating Assets and Liabilities:
Accounts receivable		(~~139~~180,~~075~~193	)		(28153,~~518~~874	)
Inventories		~~(82~~105,~~104~~863	)		58(27,~~851~~463	)
Other current assets		~~155~~(5,~~997~~542	)		~~(338~~160,~~400~~889	)
Accounts payable and accrued expenses		(5421,~~917~~345	)		~~101~~(215,~~464~~551	)
Net cash used in operating activities		(~~893~~183,~~753~~848	)		(1541,~~344,584~~317	)
Cash Flows from Investing Activities:
Purchase of property and equipment		(~~831~~115,~~690~~861	)		(1201,~~474,059~~750	)
Net cash used in investing activities		(831,690	)		(1,474,059	)
Deposits		(8,869	)
Net cash used in investing activities		(124,730	)		(201,750	)
Cash Flows from Financing Activities:
Repayments of notes payable		(22,924	)		351,496
Proceeds from notes payable		305,647			—
Issuance of common stock		(1	)		254,391
Issuance of common stock		506,426			3,687,134
Issuance of Preferred stock		(333,424	)		—
Issuance of Preferred stock		1,417,200
Issuance of unit purchase options		—			346,948
Issuance of unit purchase options		321,815			1,483,073
Issuance costs		859,475			(306,398	)
Issuance costs		(967,822	)		(2,434,345	)
Shares purchased and returned to treasury		—			—
Shares purchased and returned to treasury		—			(736,674	)
Net cash provided by financing activities		503,126			646,437
Net cash provided by financing activities		1,583,266			1,999,188
Net Increase in Cash		194,548			(96,630	)
Net Decrease in Cash		(142,177	)		(819,455	)
Cash, Beginning of Period		13,524			297,838
Cash, Beginning of Period		297,838			1,827,951
Cash, End of Period	$	208,071		$	201,208
Cash, End of Period	$	155,661		$	1,008,496
Supplemental Disclosures:
Cash paid for interest	$	9175,~~666~~224		$	4429,~~479~~677
Non-Cash Investing and Financing Transactions:
Purchase of Company’s common stock for return to treasury	$	—		$	2,000,000
None		—			—

~~See accompanying notes to the financial statements.~~5

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SCORPION PERFORMANCE, INC. ~~and~~AND ~~SUBSIDIARIES~~SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY


	Common stock						Preferred Stock Subscribed		Additional Paid-in Capital			Accumulated Deficit						Total Stockholders’ Equity
	Shares			Amount			Preferred Stock Subscribed		Additional Paid-in Capital			Accumulated Deficit			Treasury			Total Stockholders’ Equity

Balance December 31, 2008		36,039,670		$	3,604		$	—	$	19,438,479		$	(9,382,912	)	$	(2,500,000	)	$	7,559,175

Issuance of common stock		134,785			14					399,894			—			—			399,908
Issuance of Preferred stock																			—
Less: Issuance costs										(1,259,744	)								(1,259,744	)
Sale of unit purchase options										428,345									428,345
Sales of Preferred Stock								2,156,947											2,156,947
Purchase of treasury shares																			—

Net Loss		—			—								(1,907,214	)		—			(1,907,214	)

Balance December 31, 2009		36,174,455		$	3,618		$	2,156,947	$	19,006,974		$	(11,290,126	)	$	(2,500,000	)	$	7,377,417

Issuance of common stock		(11,137	)		(1	)							—			—			(1	)
Issuance of Preferred stock																			—
Less: Issuance costs										(333,424	)								(333,424	)
Sale of unit purchase options										—									—
Sales of Preferred Stock								859,475											859,475
Purchase of treasury shares																			—

Net Loss		—			—								(279,795	)		—			(279,795	)

Balance March 31, 2010		36,163,318		$	3,617		$	3,016,422	$	18,673,550		$	(11,569,921	)	$	(2,500,000	)	$	7,623,672

	Common stock				Preferred Stock Subscribed		Additional Paid-in Capital			Accumulated Deficit			Treasury			Total Stockholders’ Equity
	Shares		Amount
Balance, December 31, 2005		25,948,481	$	2,594	$	—	$	4,435,064		$	(2,746,043	)	$	—		$	1,691,615
Issuance of common stock		3,498,222		351				8,314,462			—			—			8,314,813
Less: Issuance costs								(3,999,956	)								(3,999,956	)
Sale of unit purchase options								2,022,810									2,022,810
Net Loss		—		—				—			(1,461,917	)		—			(1,461,917	)
Balance, December 31, 2006		29,446,703		2,945				10,772,380			(4,207,960	)		—			6,567,365
Issuance of common stock		3,751,955		375				7,062,812			—			—			7,063,187
Less: Issuance costs								(5,364,074	)								(5,364,074	)
Sale of unit purchase options								3,715,818									3,715,818
Net Loss		—		—							(2,424,681	)		—			(2,424,681	)
Balance December 31, 2007		33,198,658	$	3,320	$	—	$	16,186,936		$	(6,632,641	)	$	—		$	9,557,615
Issuance of common stock		2,841,012		284				4,408,755			—			—			4,409,039
Less: Issuance costs								(3,067,771	)								(3,067,771	)
Sale of unit purchase options								1,910,573									1,910,573
Purchase of treasury shares														(2,500,000	)		(2,500,000	)
Net Loss		—		—							(2,750,271	)		—			(2,750,271	)
Balance December 31, 2008		36,039,670	$	3,604	$	—	$	19,438,493		$	(9,382,912	)	$	(2,500,000	)	$	7,559,185
Issuance of common stock		170,118		17				506,409			—			—			506,426
Issuance of Preferred stock																	—
Less: Issuance costs								(967,822	)								(967,822	)
Sale of unit purchase options								321,815									321,815
Sales of Preferred Stock						1,417,200											1,417,200
Purchase of treasury shares																	—
Net Loss		—		—							(1,203,753	)		—			(1,203,753	)
Balance September 30, 2009		36,209,788	$	3,621	$	1,417,200	$	19,298,895		$	(10,586,665	)	$	(2,500,000	)	$	7,633,051

See accompanying notes to the financial statements.

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009

NOTE 1. – ORGANIZATION AND NATURE OF BUSINESS

Terms and Definitions
	Company	Scorpion Performance, Inc. and Subsidiaries
	AICPA	American Institute of Certified Public Accountants
	APB	Accounting Principles Board
	ARB	Accounting Review Board
	ASC	Accounting Standards Codification
	ASU	Accounting Standards Update
	EITF	Emerging Issues Task Force
	FASB	Financial Accounting Standards Board
	FSP	FASB Staff Position
	FIFO	First-in, First-out
	GAAP (US)	Generally Accepted Accounting Principles
	SAB	Staff Accounting Bulletin
	SEC	Securities Exchange Commission
	SFAS or FAS	Statement of Financial Accounting Standards
	Q208	Three months ended September 30, 2008
	Q209	Three months ended September 30, 2009
	PTD08	Nine months ended September 30, 2008
	PTD09	Nine months ended September 30, 2009
	YTD08	Year ended December 31, 2008

Terms and Definitions


	Company	Scorpion Performance, Inc. and Subsidiaries
	AICPA	American Institute of Certified Public Accountants
	APB	Accounting Principles Board
	ARB	Accounting Review Board
	ASC	Accounting Standards Codification
	ASU	Accounting Standards Update
	EITF	Emerging Issues Task Force
	FASB	Financial Accounting Standards Board
	FSP	FASB Staff Position
	FIFO	First-in, First-out
	GAAP (US)	Generally Accepted Accounting Principals
	SAB	Staff Accounting Bulletin
	SEC	Securities Exchange Commission
	SFAS or FAS	Statement of Financial Accounting Standards

Company Background

Scorpion Performance, Inc. (the “Company”) is a Florida company established on December 17, 1999, for the initial purpose of manufacturing high-grad rocker arms for high performance automobiles. From rocker arms, wethe ~~have~~Company has branched into a ~~full~~ full service high performance parts and components manufacturing firm. WeThe Company currently ~~design~~ designs and ~~manufacture~~manufactures a variety of branded and private label high performance automotive products and related components to automotive original equipment manufacturers, or OEMs, and the related aftermarket. WeThe Company ~~are~~is also developing other manufacturing and service capabilities to enhance ~~our~~its automotive parts business which includes in-house anodizing services to produce high-end finished products for a variety of uses in the automotive and medical and photographic imaging industries.

Subsidiaries

Anodize, LLC - In January 2004, wethe Company acquired 100% of the ownership interests in Anodize, LLC, a Florida limited liability company, through which the weCompany ~~offer~~offers private label anodizing services under the trade name “Anodize” as well as anodize ~~our~~its own products.

Scorpion Racing Products, Inc. — In June 2008, the Company reactivated Scorpion Racing, Inc. and changed its name to Scorpion Racing Products, Inc, to market and distribute its expanded line of related racing products including valves, pushrods, lifters and fuel rails.

Scorpion Medical Technologies, LLC – The Company formed Scorpion Medical Technologies, LLC October 2008 to commercialize an emerging line of medical devices.

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009

NOTE 1. – ORGANIZATION AND NATURE OF BUSINESS (Continued)

Scorpion Real Estate Investments of Broward County, LLC; and Scorpion Real Estate Investments of Marion County, LLC - In June 2007, the Company formed Scorpion Real Estate Investments of Broward County, LLC, a Florida limited liability company that holds title to the Company’s original Ft Lauderdale facility and Scorpion Real Estate Investments of Marion County, LLC, to hold title to the Company’s Ocala expansion facility.

~~Manure~~Scorpion ~~Packing Systems,~~Real ~~LLC,~~Estate aof ~~Florida~~Marion ~~limited~~County, ~~liability~~LLC ~~company~~ was formed in ~~February~~March ~~2006.~~2010 ~~In June 2007, we acquired a patent and intend~~ to ~~design~~ ~~and~~hold ~~manufacture~~title ~~a heavy duty, industrial compacting machine that~~for ~~compresses~~the ~~and~~adjacent ~~sanitarily~~property ~~bales~~at ~~horse~~5420 ~~manure.~~NW We44th doAve, ~~not expect this subsidiary to become operational in the near future~~Ocala, ~~nor will it require additional financing or resources from the Company~~FL.

~~World~~Manure ~~Waste Management~~Packing Systems, LLC, a Florida limited liability company~~, formed~~ formed in ~~May~~February 2006. ~~Through~~In ~~this~~June ~~subsidiary~~2007, wethe ~~intend~~Company toacquired ~~develop~~ a ~~biofuel product~~patent and ~~are~~intend ~~currently evaluating possible commercial applications of the~~to ~~technology.~~design ~~We anticipate that the products~~ and ~~processes~~manufacture ~~contemplated~~a byheavy ~~the operations~~duty, ofindustrial ~~this~~compacting ~~subsidiary~~machine ~~will not be commercially viable for the next~~that ~~several~~compresses ~~years~~ and ~~cannot~~sanitarily ~~predict~~bales ~~when~~horse ~~or if this subsidiary will become commercially operational~~manure. WeThe doCompany does not expect this subsidiary to become operational in the near future, nor will it require additional financing or resources from the Company.

~~Scorpion~~World ~~Rockers~~Waste Management, ~~Inc.~~ -LLC, ~~incorporated~~a in Florida limited liability company, formed in ~~2001~~May ~~for~~2006. Through this subsidiary the ~~purpose~~Company intends to develop a biofuel ofproduct ~~reserving~~and are currently evaluating possible commercial applications of the technology. ~~corporate~~The ~~name~~Company ~~and~~anticipates ~~preventing~~that ~~competitors~~the ~~from~~products ~~incorporating~~and processes contemplated inby the ~~state~~operations of ~~Florida~~this ~~under~~subsidiary awill ~~similar~~not ~~“Scorpion”~~be ~~name.~~commercially ~~This~~viable ~~subsidiary~~for isthe ~~idle,~~next ~~with~~several noyears ~~operations~~ and nocannot ~~funds~~predict ~~were~~when ~~expended~~or byif ~~the~~this ~~Company~~subsidiary inwill ~~2008 nor~~become docommercially weoperational. The Company does not expect this subsidiary to become operational in the near future, or nor will it require additional financing or resources from the Company.

Scorpion Rockers, Inc. - incorporated in Florida in 2001 for the purpose of reserving the corporate name and preventing competitors from incorporating in the state of Florida under a similar “Scorpion” name. This subsidiary is idle, with no operations and no funds were expended by the Company in 2008 nor does the Company expect this subsidiary to become operational in the near future or require financing or resources from the Company.

NOTE 2. – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of Scorpion Performance, Inc., and its wholly owned operating subsidiaries Anodize, LLC, Scorpion Real Estate Investments of Broward County, LLC, Scorpion Real Estate Investments of Marion County, LLC, Scorpion Racing Products, Inc., Scorpion Medical Technologies, LLC and ~~our~~its non-operational subsidiaries Manure Packing Systems, LLC, ~~and~~ World Waste Management, LLC and Scorpion Real Estate of Marion County, LLC. All significant intercompany balances and transactions have been eliminated in consolidation. ~~Certain reclassifications have been made in the 2008 results to conform to the presentation used in 2009.~~

~~Basis of Accounting~~ 8

The financial statements are prepared using the accrual basis of accounting where revenues and expenses are recognized in the period in which they were incurred. The basis of accounting conforms to accounting principles generally accepted in the United States of America.

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009

NOTE 2. – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis of Accounting

Interim Financial Statements

The ~~interim~~ interim financial statements presented herein have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote ~~disclosures~~ disclosures normally included in financial statements prepared in accordance ~~with~~ with accounting principles generally accepted in the United States of America ~~have~~ have been condensed or omitted pursuant to such rules and regulations. The ~~interim~~ interim financial statements should be read in conjunction with the Company’s ~~annual~~ annual financial statements, notes and accounting policies included in the Company’s Annual Report. In the opinion of management, all adjustments which ~~are~~ are necessary to provide a fair presentation of financial position as of ~~September~~March 3031, ~~2009~~2010 and the related operating results and cash flows for the interim period presented have been made. All adjustments are of a normal recurring nature. The results of operations, for the period presented are not necessarily indicative of the results to be expected for the year ended December 31, ~~2009~~2010.

Use of Estimates

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States and, accordingly, require management to make estimates and assumptions that affect the reported amounts of of assets and liabilities at the date of the financial statements and the ~~reported~~ reported amounts of revenues and expenses during the reporting period. Specifically, ~~our~~ management has estimated the expected economic life and value of ~~our~~ the Company’s manufacturing equipment, cost of maintenance of robotic equipment, economic benefit of R&D generated improvements in ~~our~~ its manufacturing equipment and processes, ~~our~~its marketing initiatives ability to generate sufficient business to support expand production capacity, potential inventory requirements as well as obsolescence and ~~our~~ net operating loss for tax purposes. It is reasonably possible that these estimates will change in the near term due to one or more future confirming events. Accordingly, actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. During the periods ~~Q309~~first quarter of 2010 and ~~YTD08~~as of December 31, 2009, the Company may have had cash deposits which exceeded federally insured limits. The Company maintains its cash balances at high quality financial institutions and has begun to spread its cash balances across several institutions, which the Company believes limits these risks.

~~Cash and Cash Equivalents~~ 9

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September 30, 2009 and December 31, 2008, cash and cash equivalents included cash on hand and cash in the bank

Accounts Receivable

Accounts receivable are reported at net realizable value. The Company has established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written-off when it is determined that the amounts are uncollectible. At September, 2009 and December 31, 2008, the allowance for doubtful accounts was approximately $1,025 and $ 0 respectively.

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009

NOTE 2. – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At March 31, 2010 and December 31, 2009, cash and cash equivalents included cash on hand and cash in the bank.

Accounts Receivable

Accounts receivable are reported at net realizable value. The Company has established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written-off when it is determined that the amounts are uncollectible. At March 31, 2010 and December 31, 2009, the allowance for doubtful accounts was approximately $0 and $ 1,025 respectively.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the FIFO method. To ensure inventories are carried at the lower of cost or market, the Company periodically evaluates the carrying value of its inventories. The Company also periodically performs an evaluation of inventory for excess and obsolete items. Such evaluations are based on management’s judgment and use of estimates. Such estimates incorporate inventory quantities on-hand, aging of the inventory, sales forecasts for particular product groupings, planned dispositions of product lines and overall industry trends.

Property and Equipment

Property and equipment are recorded at cost and depreciation is provided using the straight-line method over the estimated useful lives of the assets.

Expenditures for repairs and maintenance of property ~~and small tools~~ are charged to expense as incurred. Major replacements and betterments are capitalized and depreciated over the remaining useful lives of the assets.

Revenue Recognition

The Company recognizes revenue in accordance with the provisions of ASC Topic 605, formerly known as SAB 104 “Revenue Recognition in Financial Statements”, which states that revenue is realized or realizable and earned when all of the following four criteria are met:


	1)	Persuasive evidence of an arrangement exists,
	2)	Delivery has occurred or services have been rendered,
	3)	The seller’s price to the buyer is fixed or determinable, and
	4)	Collectability is reasonably assured.

Table of Contents

SCORPION PERFORMANCE, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2010 and 2009

NOTE 2. – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Advertising

Advertising costs are expensed as incurred and included in selling, general, and administrative expenses in the accompanying consolidated statements of operations. The Company incurred advertising expenses of $~~230~~77,~~796~~771 and $~~326~~83,~~127~~059 during ~~Q309~~the first quarter of 2010 and ~~Q308~~2009, respectively.

Research and Development

Costs ~~are~~ are expensed as incurred. Research and development expense for ~~Q309~~the first quarter of 2010 and ~~Q308~~2009 were $9033,~~774~~802 and $~~128~~32,~~749~~297, respectively.

Product Warranty

The Company’s product warranty limits its exposure to replacement parts for defects in the manufacturing process. The Company’s precision robotic manufacturing process by design mitigates manufacturing defects. Accordingly, the cost associated with product warranty has historically been immaterial. As a result, the Company records product replacement costs as incurred.

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the Nine Months Ended September 30, 2009 and 2008

NOTE 2. – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of Intangibles and Long-Lived Assets

~~We review~~The Company reviews intangible assets for impairment whenever events or changes in ~~circumstances~~ circumstances indicate that the carrying amount of an asset or asset group may not be recoverable in accordance with ASC Topic 360 (formerly SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”). In August 2008, the Company revised and improved the impairment analysis for long-lived assets. The improved analysis included fair value estimates for the facilities which includes land and building and improvements. For furniture, fixtures and equipment an analysis of the projected discounted cash flow generated from the Company’s operations was performed. The results of this analysis were sufficient to conclude that no impairment charge was required to the Company’s long-lived assets.

Income Taxes

~~We recognize~~The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be recovered. WeThe ~~provide~~Company provides a valuation allowance for deferred tax assets for which wethe doCompany does not consider realization of such assets to be more likely than not.

Table of Contents

SCORPION PERFORMANCE, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Three Months Ended March 31, 2010 and 2009

NOTE 2. – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings per share

The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260 (formerly SFAS 128, “Earnings per Share”). Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.

Segment Reporting

ASC Topic 280 (formerly SFAS 131, “Disclosures about Segments of an Enterprise and Related Information”) requires companies to report information about operating segments in interim and annual financial statements. It also requires segment disclosures about products and services geographic and major customers. The Company determined that did not have any separately reportable operating segments as of ~~September~~March 3031, ~~2009~~2010 and December 31, ~~2008~~2009.

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the Nine Months Ended September 30, 2009 and 2008

NOTE 2. – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

In January 2010, ~~June~~the ~~2009,~~ FASB issued ~~its~~Accounting ~~final~~Standards ~~statement~~Update ~~SFAS 168,~~ (“~~The~~ASU”) ~~FASB Accounting~~2010-06 ~~Standards~~which ~~Codification~~is ~~and~~intended ~~the~~to ~~Hierarchy~~improve ofdisclosures ~~Generally~~about ~~Accepted~~fair ~~Accounting Principles~~value ~~a Replacement of FASB Statement No~~measurements. ~~162”.~~The guidance ~~SFAS~~requires ~~168~~entities ~~made the~~to ~~FASB~~disclose ~~Accounting~~significant ~~Standards~~transfers ~~Codification~~in ~~(the~~and ~~Codification)~~out ~~the~~of ~~single source~~fair ofvalue ~~U.S.~~hierarchy ~~GAAP~~levels, ~~used~~the byreasons ~~nongovernmental~~for ~~entities in~~ the ~~preparation~~transfers ofand ~~financial~~to present ~~statements,~~information ~~except~~about ~~for~~purchases, ~~rules~~sales, issuances and ~~interpretive~~settlements ~~releases~~separately ofin the ~~SEC under~~ ~~authority~~reconciliation of ~~federal~~fair ~~securities~~value ~~laws,~~measurements ~~which~~using ~~are~~significant ~~sources~~unobservable ~~of authoritative~~inputs ~~accounting~~(Level ~~guidance~~3). ~~for~~Additionally, ~~SEC~~the ~~registrants.~~guidance ~~The~~clarifies ~~Codification~~that isa ~~meant~~reporting toentity ~~simplify~~should ~~user~~provide ~~access~~fair tovalue ~~all~~measurements ~~authoritative~~for ~~accounting~~each ~~guidance~~class byof ~~reorganizing~~assets ~~U.S.~~and ~~GAAP~~liabilities and ~~pronouncements~~disclose ~~into~~the ~~roughly~~inputs 90and ~~accounting~~valuation ~~topics~~techniques ~~within~~used afor ~~consistent~~fair ~~structure;~~value measurements ~~its~~using ~~purpose~~significant isother ~~not~~observable toinputs ~~create~~(Level ~~new~~2) ~~accounting~~ and ~~reporting guidance. The~~significant ~~Codification~~unobservable ~~supersedes~~inputs ~~all~~(Level ~~existing~~3). ~~non-SEC~~The ~~accounting~~Company ~~and~~has ~~reporting~~applied ~~standards and was effective for~~ the ~~Company~~new ~~beginning~~disclosure requirements ~~July~~as of January 1, ~~2009.~~2010, ~~Following~~except ~~SFAS~~for ~~168,~~ the ~~Board~~disclosures ~~will~~about purchases, ~~not~~sales, ~~issue~~issuances ~~new~~and ~~standards~~settlements in the ~~form~~Level of3 ~~Statements~~reconciliation, ~~FASB Staff~~ ~~Positions,~~which orwill ~~Emerging~~be ~~Issues~~effective ~~Task~~for ~~Force~~interim ~~Abstracts;~~and ~~instead,~~annual itperiods ~~will~~beginning ~~issue~~after ~~Accounting~~December 15, ~~Standards Updates (ASU)~~2010. The ~~FASB~~adoption ~~will~~of ~~not~~this ~~consider~~guidance ~~ASUs~~has ~~as authoritative~~not inhad ~~their~~and ~~own~~is ~~right;~~not expected ~~these updates will serve only~~ to ~~update~~have ~~the Codification,~~a ~~provide~~material ~~background~~impact ~~information about the guidance, and provide the bases for conclusions~~ on the ~~change(~~Company’s) inconsolidated ~~the Codification~~financial statements.

In ~~August~~ ~~2009~~February 2010, the FASB issued ASU ~~2009~~2010-0509 which ~~includes~~requires ~~amendments~~that toan ~~Subtopic 820-10,~~SEC ~~“Fair~~filer, ~~Value~~as ~~Measurements and Disclosures—Overall”. The update provides clarification that in circumstances~~defined, inevaluate ~~which~~subsequent aevents ~~quoted~~through ~~price in an active market for~~ the ~~identical~~date ~~liability~~that ~~is not available, a reporting entity is required to measure fair value using one or more of~~ the ~~techniques~~ ~~provided~~financial ~~for~~statements inare ~~this update~~issued. The ~~amendments~~update in this ASU clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also ~~clarifies~~removed ~~that both a quoted price in an active market for~~ the ~~identical~~requirement ~~liability at the measurement date and the quoted price~~ for ~~the identical liability when traded as~~ an ~~asset in an active~~ ~~market~~SEC ~~when~~filer ~~no adjustments~~ to disclose the ~~quoted~~date ~~price~~through ofwhich ~~the~~subsequent ~~asset~~events ~~are~~have ~~required are~~been ~~Level~~evaluated ~~1 fair value measurements. The guidance provided~~ in ~~this~~originally ~~ASU~~issued isand ~~effective for~~revised ~~the~~financial ~~first reporting period, including interim periods, beginning after issuance~~statements. The adoption of this ~~standard~~guidance on January 1, 2010 did not have a material ~~impact~~effect on the Company’s consolidated financial ~~position and results of operations~~statements.

In September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), “Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities”, which provides implementation guidance on accounting for uncertainty in income taxes, as well as eliminates certain disclosure requirements for nonpublic entities. For entities that are currently applying the standards for accounting for uncertainty in income taxes, this update shall be effective for interim and annual periods ending after September 15, 2009. For those entities that have deferred the application of accounting for uncertainty in income taxes in accordance with paragraph 740-10-65-1(e), this update shall be effective upon adoption of those standards. The adoption of this standard is not expected to have an impact on the Company’s consolidated financial position and results of operations since this accounting standard update provides only implementation and disclosure amendments. 12

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Table of Contents

SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009

NOTE 2. – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10, “Fair Value Measurements and Disclosures – Overall”, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification. The guidance in this Update is effective for interim and annual periods ending after December 15, 2009. Early application is permitted. The Company is in the process of evaluating the impact of this standard on its consolidated financial position and results of operations. The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.

In October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic 605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method and also requires expanded disclosures. The guidance in this update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.

In October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain Revenue Arrangements that Include Software Elements” and changes the accounting model for revenue arrangements that include both tangible products and software elements. Under this guidance, tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality are excluded from the software revenue guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition, hardware components of a tangible product containing software components are always excluded from the software revenue guidance. The guidance in this ASU is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.

Other ASUs not effective until after September 30, 2009, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the Nine Months Ended September 30, 2009 and 2008

NOTE 3 – INVENTORY

As of ~~September~~ 30March 31, ~~2009~~2010 and December 31, ~~2008~~2009, inventory consisted of the following:

	September 30, 2009		December 31, 2008
	March 31, 2010,		December 31, 2009
Raw Materials	$	~~303~~228,~~955~~133	$	~~353~~217,~~187~~041
Work in Progress	$	~~345~~321,~~863~~440	$	~~523~~372,~~485~~700
Finished Goods	$	~~768~~735,~~608~~665	$	~~459~~801,~~650~~362
TOTAL	$	1,~~418~~285,~~426~~239	$	1,~~336~~391,~~322~~103

NOTE 4 – NOTES PAYABLE

As of ~~September~~ 30March 31, ~~2009~~2010 and December 31, ~~2008~~2009, notes payable consisted of the following:

	September 30, 2009			December 31, 2008
	March 31, 2010,			December 31, 2009
Stock Purchase Note	$	1,686,514		$	1,686,513
Mortgage Payable – R. Walters		2,000,000			2,000,000
Capitalized Lease	$	305,647			—
Stock Purchase Note		1,686,514			1,686,514
Less Note payable - current portion	$	(505,337	)	$	(413,640	)
Capitalized Lease		259,799			282,727
Note payable	$	1,486,824		$	1,272,873
Less Note payable - current portion		(505,337	)		(505,337	))
Note payable	$	3,440,976		$	3,463,900

Stock Purchase Note

On May 2, 2008, the Company entered into a Stock Purchase Agreement with a director and beneficial shareholder of the Company, to buy back 10,000,000 shares of the Company’s common stock for an aggregate purchase price of $2,500,000. Under the terms of the Stock Purchase Agreement, the Company purchased the shares at a price of $0.25 per Share with a cash purchase price of $500,000 and the balance of $2,000,000 in the form of a 7% note due on January 1, 2013 and secured by and subject to a Mortgage and Security Agreement on the Company’s manufacturing facility and real property located in Broward County, Florida.

The Company will hold the Shares, representing approximately 28% of the issued and outstanding voting capital stock of the Company, in escrow until the Note is paid in full at which time, the Shares will be retired to the treasury of the Company. Until the Note is paid in full, the Company, or its designees, will control the voting rights of the Shares.

There is no prepayment penalty under the Note and the Company reserves the right to withhold payments due under the Note in the event of breach of the ~~Stock~~ Stock Purchase Agreement. The Company has the option to pay interest only at a ~~rate~~ rate of 10% per annum on the outstanding balance of the Note until the Due Date, at which time a balloon payment will be due. In January 2009, the Company exercised its option to pay interest only. In the ~~third~~first quarter of ~~2009~~2010, the Company made interest payments totaling $8842,~~542~~970.

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009

NOTE 4 - NOTES PAYABLE (Continued)

The Company retains the rights to collect all rents, issues and profits from the property and has the right to cure any Event of Default, as that term is defined in the Note, upon 30 days notice.

On December 22, 2009, the Company signed a mortgage for seller financing of $2,000,000 to purchase 11.73 acres with a 60,876 sq ft building which adjoins the Company’s Ocala facility. The Company has received rental income in the amount of $55,565 and paid interest on the amount of $30,000 for the three months ended March 31, 2010.

Capitalized Lease

In January 2009, the Company executed two capital leases with Machinery ~~Finance~~ Finance Resources, LLC. The terms of the lease agreement provide financing for ~~the~~ the acquisition of $385,927 of manufacturing equipment for the Ocala facility. ~~The~~ The leases have been accounted for as capital leases and provide for 60 monthly payments of $7,585 and bear interest at 6.9%. Amortization of assets under capitalized leases is included in depreciation expense. Interest incurred in the ~~nine~~three months ending ~~September~~March 3031, ~~2009~~2010 is $165,~~355~~ 329.

Future ~~minimum~~ minimum payments under the capitalized lease at ~~September~~March 3031, ~~2009~~2010 are:

2009	$	22,755
2010	$	68,267
2010	$	91,023
2011	$	91,023
2012 and beyond	$	189,631
Total minimum lease payments	$	394,432
Less amounts representing interest	$	52,849
Less deposit	$	15,138
Present value of net lease minimum lease payments included in long term debt	$	326,445

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009

NOTE 5 - EQUITY

Common Stock and Unit Purchase Options

For the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010, the Company raised a total of ~~$4,441,492~~ of ~~which $1,165,214 was generated through the sale of our common~~ ~~stock,~~ $~~990~~859,~~578~~475 ~~was generated~~ through the sale of ~~unit purchase options and $2,285,700 was generated through the sale of~~ preferred stock (see ~~series~~Series A ~~Preferred~~ 10% Convertible Stock below). Commissions and finder’s fees were incurred on the above sales in the aggregate amount of $1333,~~853,339~~424. The ~~Company authorized the~~ ~~issuance~~foregoing ofsales ~~170,118~~were ~~shares~~made ofin ~~its~~reliance ~~common~~upon ~~stock~~the intransaction aexemption ~~series of individual~~afforded ~~transactions~~by toRegulation ~~foreign~~S ~~investors~~promulgated ~~priced~~by ~~between~~the ~~$1.00~~Securities and ~~$3.00,~~Exchange ~~and~~Commission ~~643,630,~~under the ~~Unit~~Securities ~~Purchase~~Act. ~~Options~~There towere ~~existing~~no ~~shareholders~~issuances atto astockholders ~~price~~residing ofin ~~$.50~~the ~~per Unit,~~United ~~each~~States. ~~Unit~~The ~~consisting~~funds ofreceived ~~two~~have ~~shares~~been ofused ~~common~~for ~~stock~~operational ~~exercisable~~purposes ~~at $1.00 per~~and ~~share~~equipment ~~until December 31, 2011~~purchases.

~~The~~Series ~~foregoing~~A ~~sales~~10% ~~were~~Convertible ~~made~~Stock in reliance upon the transaction exemption afforded by Regulation S promulgated by the Securities and Exchange Commission under the Securities Act. There were no issuances to stockholders residing in the United States. The funds received have been used for operational purposes and equipment purchases.

In April 2009, the Company initiated a private offering to existing shareholders of the Company of up to 1,500,000 shares of preferred stock designated as Series A 10% Preferred Stock (the “Series A Preferred Shares”) at a purchase price of $10.00 per share. Under the terms of the offering, for a period of two years, the Company will pay a 10% dividend on each share of Series A Preferred Stock, payable at the option of the Company, in cash or shares of common stock. Each share of the Series A Preferred Stock carries 10 votes on matters submitted to shareholders for voting purposes and is convertible into 10 shares of the Company’s common stock subject to anti-dilution in the event of the subdivision, combination or consolidation by stock split, stock dividend, combination or like event, into a greater or lesser number of shares of common stock. As of March 31, 2010, 253,690 shares of Series A Preferred Stock have been issued.

In April 2009, we initiated a private offering to existing shareholders of the Company of up to 1,500,000 shares of preferred stock designated as Series A 10% Preferred Stock (the “Series A Preferred Shares”) at a purchase price of $10.00 per share. Under the terms of the offering, for a period of two years, the Company will pay a 10% dividend on each share of Series A Preferred stock, payable at the option of the Company, in cash or shares of common stock. Each share of the Series A Preferred Stock carries 10 votes on matters submitted to shareholders for voting purposes and is convertible into 10 shares of the Company’s common stock subject to anti-dilution in the event of the subdivision, combination or consolidation by stock split, stock dividend, combination or like event, into a greater or lesser number of shares of common stock. As of September 30, 2009, 121,120 shares of preferred stock have been issued.

Series B Preferred Stock

In July 2009, the Company authorized the issuance of 500,000 shares of ~~preferred~~ preferred stock designated as Series B Preferred Stock (the “Series B Preferred Stock”) to Robert Stopanio, the Company’s President, sole director, and a ~~controlling~~ controlling shareholder of the Company. The shares are being issued at in lieu of a cash bonus, for Mr. Stopanio’s development of a manufacturing incubator and a medical components manufacturing division which will be operated through ~~the~~ the Company’s subsidiary, Scorpion Medical Technologies, LLC. Each share of the Series B Preferred Stock carries 30 votes on matters submitted to shareholders for voting purposes and each holder of Series B Preferred Stock shall have the ~~right~~ right to convert all or part of his or her shares of Series B Preferred Stock ~~into~~ into shares of the Company’s common stock by dividing the original purchase price by $.001 subject to adjustment in the event of the subdivision, combination or consolidation by stock split, stock dividend, combination or like event. The Series B Preferred Shares are not entitled to dividends or preference upon liquidation. On July 17, the Company authorized an amendment to the Certificate of Designations of the Company’s Series B Preferred stock to clarify transfer and conversion restrictions. Articles of Amendment to the Company’s Articles of Incorporation were filed on November 9, 2009. As amended, holders of the Series B Preferred Stock may convert shares to common stock of the Company only upon a change of control in the management and ownership of the Company. Further, holders of Series B Preferred Stock may only transfer the shares to immediate family members. As of the date of this Report, no shares of Series B Preferred Stock have been issued.

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SCORPION PERFORMANCE, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009

NOTE 5 – EQUITY (Continued)

The Series B Preferred Shares are not entitled to dividends or preference upon liquidation. In November 2009, the Company amended the Certificate of Designations of the Company’s Series B Preferred stock to clarify transfer and conversion restrictions. As amended, holders of the Series B Preferred Stock may convert shares to common stock of the Company only upon a change of control in the management and ownership of the Company. Further, holders of Series B Preferred Stock may only transfer the shares to immediate family members. As of the date of this Report, no shares of Series B Preferred Stock have been issued.

NOTE 6 – LIQUIDITY

~~Our~~The Company’s primary sources of liquidity are the cash flow generated from ~~our~~ operations and to a decreasing extent, ~~the~~ fund raising activities associated ~~with~~ with selling stock and unit purchase options to foreign investors. These sources of liquidity are needed to fund ~~our~~the Company’s debt service requirements, working capital requirements, capital expenditure requirements, and the remaining one-time costs associated with the completion of ~~our~~the ~~facilities~~Company’s facilities expansion in Ocala, Florida.

NOTE 7 – COMMITMENTS ~~and~~AND CONTINGENCIES

~~Ocala Facility Construction,~~In ~~The~~2008, the Company ~~estimates~~began ~~that~~building anout ~~additional~~a ~~$350~~36,000 ~~will~~sq beft ~~needed~~production ~~over~~facility ~~the next~~in ~~nine~~Ocala ~~months~~Florida to ~~complete~~expand ~~the~~its ~~construction~~automotive and ~~outfitting~~medical ofcomponent ~~the~~manufacturing ~~Ocala Facility~~with ~~necessary~~an toanticipated ~~make~~opening ~~the~~in ~~facility~~early ~~operational~~2009 and budget of $2,000,000. ~~Due~~As toa ~~significant~~result ~~unforeseen~~of ~~expenses~~unanticipated ~~incurred~~delays inbeyond the ~~process~~Company’s ofcontrol, ~~completing~~together ~~the~~with ~~retrofitting~~costs ofand ~~our~~a ~~facility,~~general ~~particularly~~freeze ~~associated~~on ~~with~~credit ~~electrical~~and ~~systems,~~funding ~~window~~to ~~installations~~fully fund construction during 2009, the Company revised its initial budget to $3.2 million and ~~HVAC~~extended ~~systems,~~the wemove date ~~expanded~~to ~~our~~the ~~previous~~third ~~estimate~~quarter of ~~completion costs~~2010. ~~Consequently~~ As of March 31, we2010, ~~have~~the ~~revised~~Company ~~our~~has ~~estimates~~spent approximately of$2,672,651 ~~future~~for construction costs, ~~necessary~~permitting and new equipment purchases and believes it will be able to ~~make~~stay within the revised budget to make the Ocala facility fully operational toby ~~reflect~~its antarget ~~additional $350,000~~date.

British American Insurance Company (Trinidad) Limited, a company incorporated pursuant to the laws of Trinidad and Tobago v. Robert Stopanio, Teresa Stopanio, Blue Thunder Racing Engines, LLC, Blue Thunder Racing Engines and Scorpion Performance, Inc., Case No. CACE07008295 filed in the 17th Circuit Court for Broward County, Florida in April 2007. British American alleges breach of contract in connection with repair work for marine racing engines and is seeking compensatory damages and interest in excess of $50,000. This matter is pending. Management asserts that it will prevail in this matter and accordingly no loss provision has been recorded. No actions or events have occurred regarding this matter during the current quarter.

Manure Packing Systems. LLC v. Carl Del Spino, Case No. CACE06-015650(12) filed in the 17th Circuit Court for and in Broward County, Florida in October 2006. Our subsidiary filed this action against Del Spino for breach of contract in connection with the purchase of the manure waste packaging patent. In June 2007, the Court issued an order requiring the seller to comply with the terms of the purchase agreement and to assign the patent application to MPS. The assignment was filed with the United States Patent and Trademark Office on June 12, 2007. This matter is currently pending determination on the matter of damages. Management asserts that it will prevail in this matter and accordingly no loss provision has been recorded. No actions or events have occurred regarding this matter during the current quarter.

NOTE 8 – SUBSEQUENT EVENTS

~~On September 23, 2009 a contract was signed for the purchase of~~The ~~property~~Company ~~located~~has atevaluated ~~5420~~subsequent NWevents ~~44th~~through ~~Avenue,~~May ~~Ocala, FL which adjoins our Ocala plant on the south side. The property consists of~~ 11~~.73 acres~~, ~~a 60~~2010,~~876~~ sqthe ftdate the ~~building,~~financial ofstatements ~~which~~were 40issued,~~000~~ sqand ftconcluded isthat ~~rented~~there toare ~~outside~~no ~~tenants and 20,000 for our~~material ~~own~~subsequent ~~use~~events.

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	The following terms and definitions are commonly used throughout this filing.
	Company	Scorpion Performance, Inc. and Subsidiaries
	AICPA	American Institute of Certified Public Accountants
	APB	Accounting Principles Board
	ARB	Accounting Review Board
	ASC	Accounting Standards Codification
	ASU	Accounting Standards Update
	EITF	Emerging Issues Task Force
	FASB	Financial Accounting Standards Board
	FSP	FASB Staff Position
	FIFO	First-in, First-out
	GAAP (US)	Generally Accepted Accounting Principles as applied in the United States
	SAB	Staff Accounting Bulletin
	SEC	Securities Exchange Commission
	SFAS or FAS	Statement of Financial Accounting Standards
	Q208	Three months ended September 30, 2008
	Q209	Three months ended September 30, 2009
	PTD08	Nine months ended September 30 2008
	PTD09	Nine months ended September 30, 2009
	YTD08	Year ended December 31, 2008

The following terms and definitions are commonly used throughout this filing.


	Company	Scorpion Performance, Inc. and Subsidiaries
	AICPA	American Institute of Certified Public Accountants
	APB	Accounting Principles Board
	ARB	Accounting Review Board
	ASC	Accounting Standards Codification
	ASU	Accounting Standards Update
	EITF	Emerging Issues Task Force
	FASB	Financial Accounting Standards Board
	FSP	FASB Staff Position
	FIFO	First-in, First-out
	GAAP (US)	Generally Accepted Accounting Principals
	SAB	Staff Accounting Bulletin
	SEC	Securities Exchange Commission
	SFAS or FAS	Statement of Financial Accounting Standards

Cautionary Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q (“Report”) contains forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements, including any statements relating to future actions and outcomes including but not limited to prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expense trends, future interest rates, outcome of contingencies and their future impact on financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “contemplates,” “predicts,” “potential,” or “continue” or variations and/or the negative of these similar terms. Forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company, us, our future performance, our beliefs and Management’s assumptions. All forward-looking statements made in this Report, including any future written or oral statements made by us or on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

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These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. Any assumptions, upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this Report. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions,; (b) whether we are able to manage our planned growth efficiently and operate profitable operations,; (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations,; (d) whether we are able to successfully fulfill our primary requirements for cash. Please refer to Part II, ITEM 6 7 under “Liquidity and Capital Resources” and under Part I Item 1A “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2009 ~~2008~~ for additional discussion. Please also refer to our other filings with the Securities and Exchange Commission. We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.

Available Information

At the present time, there is no public market for the common stock of Scorpion Performance and our common stock is not traded on any exchange or quoted on any service.

On October 10, 2007, Scorpion Performance filed a registration statement on Form 10-SB under the Securities Exchange Act of 1934 (the “Exchange Act”) on a voluntary basis to provide current public information to the investment community, which registration statement became effective on December 12, 2007. We filed several amendments in response to comments from the SEC for clarification of statements and disclosures made in our initial filing, and on August 18, 2009, received notice from the SEC that the staff had no further comments. Since the date our registration became effective, we have been subject to the informational requirements of the Exchange Act and, in accordance therewith are required to file annual, quarterly and current reports and information with the SEC.

We will make available and voluntarily provide paper copies, free of charge upon written request to our principal, copies of any registration statement, amendments, and other reports and other information we file with the SEC as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. Our registration statement, amendments, and other reports and other information we file subsequently can also be inspected and copied at the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Such reports and other information may also be obtained from the web site that the SEC maintains at http://www.sec.gov. Further information about the operation of the Public Reference Room may be obtained by calling the SEC at 1- 800-SEC-0330.

OVERVIEW

The Company. Scorpion Performance, Inc. (the “Company”) was incorporated in Florida onin ~~December 17,~~ 1999, for the initial purpose of manufacturing high- grade rocker arms for high ~~performance~~ performance automobiles. A rocker arm is a pivoted lever used in an internal ~~combustion~~ combustion engine to transfer the motion of the camshaft or pushrod to the valve stem that opens and closes the valves that let the air/fuel mixture into an engine and the exhaust gases out of the engine. From rocker arms, we ~~have~~expanded our product ~~branched~~line ~~into~~to ainclude ~~full~~lifters, ~~service~~push ~~high~~rods, ~~performance~~valve ~~parts~~springs and ~~components manufacturing~~fuel ~~firm~~rail kits. We currently design and manufacture a variety of branded and private label high performance automotive products and related components to automotive original equipment manufacturers, or OEMs, and the related aftermarket. We are also developing other manufacturing and service capabilities to enhance our automotive parts business which includes in-house anodizing services to produce high-end finished products for a variety of uses in the automotive and medical and photographic imaging industries.

Products and Services. We manufacture rocker arms under both our own Scorpion brand and also to our customer’s specifications under their private label brands, using what we believe to be state of the art lathes, grinders, hydraulic “tombstone” fixtures and related machines. We start with bars of raw high-grade aluminum, that are stacked in a special magazine bar feeder that allows our operators to automatically feed the bars into a saw that cuts each bar to specification. Under our latest automation technology, the cut bars are fed into a series of machines that have been specially engineered by Scorpion engineers to cut, punch out and grind the bars into individual rocker arms. The rocker arms are then immersed in a series of solutions to anodize the rocker arms resulting in 16 colorful rocker arms bearing a distinctive laser-etched logo nestled in a “candy box” for shipment to a warehouse marketer. 18

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~~Production~~In ~~Costs~~addition ~~and~~to ~~Suppliers.~~our ~~Our~~core ~~principal~~automotive ~~raw~~products ~~materials are aluminum extrusion and specialty steel~~categories, ~~which~~we ~~along~~also ~~with labor represent the~~manufacture ~~largest~~non-FDA regulated components ~~of our production costs. Steel demand~~ and ~~prices~~assemblies ~~have tumbled~~for ~~across~~ the ~~globe~~medical ~~after~~industry. ~~the~~We ~~global~~are ~~credit crisis paralyzed consumers’~~in ~~purchasing~~the ~~power~~process ~~and~~of ~~also~~obtaining ~~forced~~ISO ~~producers~~certification tofor ~~cut~~our ~~production~~Ocala ~~sharply~~facility towhich, ~~match~~upon ~~weakening~~approval, ~~demand.~~will Aspermit aus ~~result we have enjoyed lower costs and have been able~~ to ~~adequately~~ ~~maintain~~manufacture ~~reserves.~~implantable ~~Although~~FDA ~~recent~~regulated ~~economic problems and uncertainty~~medical indevices ~~the U.S.~~ and ~~global~~equipment ~~economy~~in ~~has~~accordance ~~forced~~with ~~some~~FDA ~~suppliers~~requirements ~~into~~which ~~bankruptcy~~we orbelieve ~~out~~will ofallow ~~the~~us ~~market, we continue~~ to ~~purchase~~use ~~raw~~our ~~material~~high ~~from~~performance antechnologies ~~adequate pool of up~~ to 19manufacture ~~suppliers,~~a ~~the largest being Crown Extrusions, which represents~~wider ~~approximately~~variety ~~21%~~ of ~~our~~medical ~~materials~~devices ~~purchases~~and components.

~~Employees~~Products and Services. We ~~Scorpion~~manufacture ~~has~~rocker 37arms ~~full-time~~under ~~employees~~both our own Scorpion brand and noalso ~~part-time~~to our ~~employees~~customer’s specifications under their private label brands, using what we believe to be state of the art lathes, grinders, hydraulic “tombstone” fixtures and related machines. ~~None~~We start with bars of raw high-grade aluminum, that are stacked in a special magazine bar feeder that allows our ~~employees~~operators to automatically feed the bars into a saw that cuts each bar to specification. Under our latest automation technology, the cut bars are ~~represented~~fed byinto a ~~collective~~series ~~bargaining~~of ~~agreement~~machines that have been specially engineered by Scorpion engineers to cut, punch out and grind the bars into individual rocker arms. ~~Management~~The rocker arms are then immersed in a series of ~~Scorpion~~solutions ~~considers~~to ~~its~~anodize ~~relationship~~the ~~with~~rocker ~~its~~arms ~~employees~~resulting in 16 colorful rocker arms bearing a distinctive laser-etched logo nestled in a “candy box” for shipment to bea ~~satisfactory~~warehouse marketer. All of our products are manufactured in the United States.

Production Costs and Suppliers. Our principal raw materials are aluminum extrusion and specialty steel, which along with labor represent the largest components of our production costs. Steel demand and prices have tumbled across the globe after the global credit crisis paralyzed consumers’ purchasing power and also forced producers to cut production sharply to match weakening demand. As a result we have enjoyed lower costs and have been able to adequately maintain reserves. Although recent economic problems and uncertainty in the U.S. and global economy has forced some suppliers into bankruptcy or out of the market, we continue to purchase raw material from an adequate pool of up to 19 suppliers, the largest being Crown Extrusions, which represents approximately 32% of our materials purchases.

Employees. Scorpion has 49 full-time employees and no part-time employees. None of our employees are represented by a collective bargaining agreement. Management of Scorpion considers its relationship with its employees to be satisfactory.

Customers and Distribution. We sell our products through over 110 distributors and directly to OEM customers, of which one distributor accounts for approximately 27% of our revenue, and in the aggregate with four other distributors, accounts for over 50% of our annual revenue. All of our orders are open purchase orders from distributors most of which we have established long-term relationships and, generally, are processed, manufactured and delivered to the distributor within 10-12 days of receipt of the purchase order. We deliver or ship finished products directly to OEM customers. Our products are also distributed to aftermarket customers through a network of warehouse auto parts distributors.

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SUBSIDIARIES

The Company’s wholly owned subsidiaries are Anodize, LLC, Scorpion Racing Products, Inc., Scorpion Medical Technologies, LLC, Scorpion Real Estate Investments of Broward County, LLC, Scorpion Real Estate Investments of Marion County, LLC, Scorpion Real Estate of Marion County, LLC, Manure Packing Systems, LLC, World Waste Management, LLC and Scorpion Rockers, Inc.

CRITICAL ACCOUNTING POLICIES

For a discussion of our critical accounting estimates and policies, see Note 2 to our consolidated financial statements.

NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are in Note 2 to our consolidated financial statements and below:

In ~~June~~ ~~2009~~January 2010, the FASB issued ~~its~~Accounting ~~final~~Standards ~~statement~~Update ~~SFAS 168,~~ (“~~The~~ASU”) ~~FASB~~2010-06 ~~Accounting Standards~~which ~~Codification~~is ~~and~~intended ~~the~~to ~~Hierarchy~~improve ofdisclosures ~~Generally~~about ~~Accepted~~fair ~~Accounting~~value ~~Principles~~measurements. aThe guidance ~~Replacement~~requires ofentities ~~FASB~~to ~~Statement~~disclose ~~No.~~significant ~~162”.~~transfers ~~SFAS~~in ~~168~~and ~~made~~out ~~the~~of ~~FASB~~fair ~~Accounting~~value ~~Standards~~hierarchy ~~Codification~~levels, (the ~~Codification)~~reasons for the ~~single~~transfers ~~source~~and ofto ~~U.S.~~present ~~GAAP used~~information byabout ~~nongovernmental~~purchases, ~~entities in the preparation of financial statements~~sales, ~~except for~~issuances ~~rules~~ and ~~interpretive~~settlements ~~releases~~separately ofin the reconciliation ~~SEC~~of ~~under~~fair ~~authority~~value ofmeasurements ~~federal securities~~using ~~laws,~~significant ~~which~~unobservable ~~are~~inputs (Level ~~sources~~3). ofAdditionally, ~~authoritative~~the ~~accounting~~ guidance ~~for~~clarifies ~~SEC registrants.~~that ~~The~~a ~~Codification~~reporting isentity ~~meant~~should provide tofair ~~simplify~~value ~~user~~measurements ~~access~~for toeach ~~all authoritative~~class ~~accounting~~of ~~guidance~~assets byand ~~reorganizing~~liabilities ~~U.S. GAAP pronouncements into~~and ~~roughly~~disclose 90the ~~accounting~~inputs ~~topics~~and ~~within~~valuation atechniques ~~consistent~~used ~~structure;~~for ~~its~~fair ~~purpose~~value ~~is not~~measurements tousing ~~create~~significant ~~new~~other ~~accounting~~observable ~~and~~inputs ~~reporting~~(Level ~~guidance.~~2) ~~The~~and ~~Codification supersedes~~significant ~~all~~unobservable ~~existing~~inputs ~~non-SEC~~(Level ~~accounting~~3). ~~and~~The ~~reporting~~Company ~~standards~~has ~~and~~applied ~~was~~the ~~effective~~new ~~for~~disclosure ~~the~~requirements ~~Company~~as ~~beginning~~of ~~July~~January 1, ~~2009.~~2010, ~~Following~~except ~~SFAS~~for ~~168,~~ the ~~Board~~disclosures ~~will~~about ~~not~~purchases, ~~issue~~sales, ~~new~~issuances ~~standards~~and settlements in the ~~form~~Level of3 ~~Statements~~reconciliation, ~~FASB~~which ~~Staff~~will ~~Positions, or~~be ~~Emerging~~effective ~~Issues~~for ~~Task~~interim ~~Force~~and ~~Abstracts;~~annual ~~instead,~~periods itbeginning ~~will~~after ~~issue~~December ~~Accounting Standards~~15, ~~Updates (ASU)~~2010. The adoption ~~FASB~~of ~~will~~this ~~not~~guidance ~~consider~~has ~~ASUs~~not ashad ~~authoritative~~and ~~in their~~is ~~own~~not ~~right;~~expected ~~these updates will serve only~~ to ~~update~~have ~~the~~a ~~Codification,~~material ~~provide~~impact ~~background information about the guidance, and provide the bases for conclusions~~ on the ~~change(~~Company’s) inconsolidated ~~the~~financial ~~Codification~~statements.

In February 2010, the FASB issued ASU 2010-~~20-~~09 which requires that an SEC filer, as defined, evaluate subsequent events through the date that the financial statements are issued. The update also removed the requirement for an SEC filer to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The adoption of this guidance on January 1, 2010 did not have a material effect on the Company’s consolidated financial statements.

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In August 2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures—Overall”. The update provides clarification that in circumstances, in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update. The amendments in this ASU clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this ASU is effective for the first reporting period, including interim periods, beginning after issuance. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations.

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Other ASUs not effective until after September 30, 2009, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

RESULTS OF OPERATIONS

The following discussion and analysis addresses the major factors that affected our operations and financial condition reflected in our consolidated unaudited financial statements for the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010 and audited financial statements for the year ended December 31, ~~2008~~2009. This discussion is intended to supplement and highlight information contained in, and should be read in conjunction with, our financial statements and related notes and the selected financial data presented elsewhere in this report.

~~-22-~~Results of Operations for the three months ended March 31, 2010 as compared to the three months ended March 31, 2009

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Results of Operations for the three months ended September 30, 2009 as compared to the three months ended September 30, 2008

NET INCOME

Net revenue for the three months ended March ~~September 30~~31, ~~2009~~ 2010 was $~~677~~1,~~567~~023,052 aan ~~decrease~~increase of $11268,~~483~~317 or 236%, compared to net revenue of $~~689~~754,~~050~~ 735 for the three months ended ~~September~~March 3031, ~~2008~~2009. ~~Net~~The ~~revenue~~increase ~~for the three months~~in ~~ended~~net ~~September~~revenue ~~30, 2009~~ was ~~down~~primarily ~~from the same period ended 2008~~ due to ~~reduced~~ ~~orders for anodizing services, as a result of the economic downturn; however this decrease was offset during 2009 by~~ an increase in demand for private label ~~parts~~products and bythe ~~sales~~acquisition of ~~automotive~~several ~~parts~~large ~~through~~accounts ~~the~~from ~~Company’s~~former ~~Scorpion Racing Products division which we launched in late 2008~~competitors.

NET REVENUE BY SOURCE

	Three Months Ended September 30, 2009				Three Months Ended September 30, 2008				Change From Prior Period
	Three Months Ended March 31, 2010				Three Months Ended March 31, 2009				Change From Prior Year
PRODUCTS
Scorpion Brand	$	212,615	31	%	$	215,942	31	%	$	(3,327	)	-2	%
Scorpion Brand Rocker Arms	$	277,355	27	%	$	352,859	47	%	($	75,504	)	-21	%
Scorpion Racing Products	$	30,782	5	%	$	—			$	30,782		100	%
Private Label Rocker Arms	$	648,422	63	%	$	339,616	45	%	$	308,806		91	%
Private Label	$	363,834	54	%	$	332,201	48	%	$	31,633		10	%
Total Products	$	925,777	90	%	$	692,475	92	%	$	233,302		34	%
Total Products	$	607,231	90	%	$	548,143	80	%	$	59,088		11	%
SERVICES
Anodizing:
Anodizing	$	14,820	2	%	$	28,831	4	%	$	(14,011	)	-49	%
Racing Products	$	30,175	3	%	$	28,094	4	%	$	2,081		7	%
Medical Components	$	5567,~~516~~100	87	%	$	~~112~~34,~~076~~166	165	%	$	~~(56~~32,~~560~~934	)	~~-50~~96	%
Total Services	$	7097,~~336~~275	10	%	$	~~140~~62,~~907~~260	208	%	$	~~(70~~35,~~571~~015	)	~~-50~~56	%
NET REVENUE	$	~~677~~1,~~567~~023,052	100	%	$	~~689~~754,~~050~~735	100	%	$	~~(11~~268,~~483~~317	)	-236	%

Cost of sales for the three months ended ~~September~~March 3031, ~~2009~~2010 was $~~378~~563,~~991,~~414 aan ~~decrease~~increase of $~~193~~46,~~966~~420 or 349% compared to cost of of sales of $~~572~~516,~~957~~993 for the three months ended ~~September~~March 3031, ~~2008~~2009. ~~Our~~The ~~cost~~increase ofwas ~~sales decreased primarily as a result of a reduction in freight and a $50,030 decrease~~ due to aincreased ~~reclassification~~sales ~~of direct labor costs in connection with the build out of our Ocala facility~~volume. AsGross ~~a result, gross~~ profit for the three months ended ~~September 30~~March 31, ~~2009~~2010 was $~~298~~459,~~576~~638 an increase of $~~182~~221,~~483~~897 or ~~157~~93%, compared to gross profit of $~~116~~237,~~093~~741 for the ~~nine~~three months ended ~~September~~March 3031, ~~2008~~ 2009.

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Total operating expenses for the three months ended ~~September~~ 30March 31, ~~2009~~2010 were $~~609~~719,~~640,~~786 a ~~decrease~~increase of $9038,~~863~~106 or 136% as compared to total ~~operating~~ expenses of $~~700~~681,~~503~~680 for the ~~three~~year ~~months~~ ended ~~September~~March 3031, ~~2008.~~ ~~The~~2009 ~~change is primarily a result of the following~~as follows:

•	Selling and marketing expenses decreased $87,230 or 42% as a result of cutbacks and reduction in advertising expenditures.
•	Research and development expenses decreased $2,397 or 7% due primarily to the prioritizing of and reduction in the number of projects.
•	Salaries and benefits expense increased $27,947 or 28% primarily as a result of reclassification of direct labor.
•	General and administrative expense decreased $29,184 or 8% due to:
	o	a $2,202 decrease in automobile expense due to a decrease in fuel costs and maintenance.
	o	a $12,065 decrease in small tools due to reclassification as a component of our cost of sales.
	o	a $3,216 decrease in utilities due to decreased usage.
	o	an $8,656 increase in rent due to warehousing building materials and supplies in Ocala, FL.
	o	a $4,955 decrease in office and warehouse supplies as a result of price shopping; and just in time ordering of office supplies.
	o	a $15,401 decrease in other general and administrative expenses.


	•	Selling and marketing expenses remained consistent at $126,561 as compared to $127,190 for the quarter ended March 31, 2009.

	•	Research and development expenses increased $1,506 or 5% due primarily to the development of a new robotic cell.

	•	Salaries and benefits expense increased $27,543 or 28% as a result of adjustments to current staffing levels.

	•	General and administrative expense increased $9,686 or 2% as a result of a $9,059 increase in moving expenses from our Fort Lauderdale location to our Ocala facility, a $3,153 increase in utilities due to an increase in rates and usage, and a $29,646 increase in equipment depreciation all of which was offset by a $29,366 decrease in professional fees.

Other Income (Expense) for the three months ended ~~September 30~~March ~~2009~~31, 2010 was ($3219,~~038~~647) aan ~~decrease~~increase of $29,~~406~~249 or 832% as compared to other income of ($2928,~~632~~897) for the three months ended ~~September~~March 3031, ~~2008~~2009. ~~Interest expense~~This ~~remained~~category ~~consistent;~~is ~~however,~~composed of interest income ~~decreased~~and ~~due~~rental toincome anet of interest expense. The decrease in ~~cash~~ asexpense is primarily a result of ~~using~~increased interest expense related to debt and a decrease in interest income resulting from a decrease in cash ~~reserves~~balances ~~for~~along ~~our~~with ~~Ocala~~increase ~~project~~in rental income from an adjacent building purchase in December 2009.

We realized a net loss of $~~343~~(279,~~102~~795) for the three months ended ~~September~~March 3031, ~~2009~~2010 as ~~compared~~ compared to a net loss of $~~614~~(472,~~042~~836) for the ~~same~~three ~~period~~months ended ~~September~~March 3031, ~~2008~~2009.

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Results of Operations for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008

NET INCOME

Net revenue for the nine months ended September 30, 2009 was $2,211,540, a decrease of $205,246 or 8% compared to net revenue of $2,416,786 for the nine months ended September 30, 2008. Net revenue increased during the first and part of the second quarter of 2009, up 11%, 14% and 10% for the months February, March and April. Following a flat summer, we saw sales pick up again with net revenue increasing again, up 16% and 15% for the months of August and September, respectively.

NET REVENUE BY SOURCE

	Nine Months Ended September 30, 2009				Nine Months Ended September 30, 2008				Change From Prior Period
PRODUCTS
Scorpion Brand	$	684,909	31	%	$	786,365	33	%	$	(101,456	)	-13	%
Scorpion Racing Products	$	143,791	7	%	$	—			$	143,791		100	%
Private Label	$	1,150,753	52	%	$	1,247,088	52	%	$	(96,335	)	-8	%
Total Products	$	1,979,453	90	%	$	2,033,453	84	%	$	(54,000	)	-3	%
SERVICES
Anodizing:
Anodizing	$	62,956	3	%	$	109,123	5	%	$	(46,167	)	-42	%
Medical Components	$	169,131	8	%	$	274,210	11	%	$	(105,079	)	-38	%
Total Services	$	232,087	10	%	$	383,333	16	%	$	(151,246	)	-39	%
NET REVENUE	$	2,211,540	100	%	$	2,416,786	100	%	$	(205,246	)	-8	%

Cost of sales for the nine months ended September 30, 2009 was $1,376,579 a decrease of $234,893 or 15% compared to cost of sales of $1,611,472 for the nine months ended September 30, 2008. As discussed under results for the three months ended September 30, cost of sales decreased primarily as a result of a reduction in freight and a decrease due to a reclassification of direct labor costs in connection with the build out of our Ocala facility. Gross profit for the nine months ended September 30, 2009 was $834,961, an increase of $29,647 or 4%, compared to gross profit of $805,314 for the nine months ended September 30, 2008.

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Total operating expenses for the nine months ended September 30, 2009 were $1,933,931 an increase of $343,225 or 15% as compared to total operating expenses of $2,277,156 for the nine months ended September 30, 2008. The change is due to:

•	Selling and marketing expenses decreased $194,012 or 32% as a result of cutbacks and reduction in advertising expenditures.
•	Research and development expenses decreased $37,975 or 29% due the prioritizing of and reduction in the number of projects.
•	Salaries and benefits expense increased $62,670 or 20% primarily as a result of reclassification of direct labor.
•	General and administrative expense decreased $173,908 or 14% which is primarily a result of the following:
	o	a $65,109 decrease in professional fees due to reduced contractual matters.
	o	a $41,720 decrease in automobile expense due to a decrease in fuel costs and maintenance.
	o	a $61,232 decrease in repairs & maintenance due to updating equipment in prior quarters.
	o	a $2,598 decrease in workers compensation insurance due to no injuries.
	o	a $13,136 decrease in small tools due to reclassification as a component of our cost of sales.
	o	a $9,887 increase in other general and administrative expenses.

Other Income (Expense) for the nine months ended September 30 2009 was ($104,783) an increase of $5,898 or 6% as compared to other income of ($98,885) for the nine months ended September 30, 2008. Interest income was down $18,711 or 91% due which was offset by a $47,187 increase in interest expense related to our stock repurchase from a former director and a $60,000 decrease in lawsuit settlements for September 30, 2009 which was $15,000 compared to $75,000 for September 30, 2008.

We realized a net loss of $1,203,753 for the nine months ended September 30, 2009 as compared to a net loss of $1,570,727 for the nine months ended September 30, 2008.

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LIQUIDITY AND CAPITAL RESOURCES

At ~~September~~ 30March 31, ~~2009~~2010, we had an accumulated deficit of $(1011,~~586~~569,~~664~~921) ~~and~~as ~~cash~~compared ~~and~~to ~~cash equivalents of~~ $~~155~~(11,~~661.~~290,125) ~~For~~for the year ended December 31, ~~2008~~2009. ~~our~~As of March 31, 2010, we ~~accumulated~~had ~~deficit~~cash and cash equivalents ~~were~~of $(9208,~~382~~071,~~912)~~ ~~and~~an increase of $~~297~~194,~~838,~~548 or 1439% as ~~respectively~~compared to the year ended December 31, 2009. The increase in cash during the first quarter of 2010 was due primarily to proceeds from sales of Series A 10% Convertible Preferred stock and rental income.

Our ~~primary~~ primary sources of cash ~~continue~~during toour belast ~~from~~two ~~our~~fiscal years have been rocker arm operations, anodizing services and the sale of our equity securities. Our cash flows from operations are derived primarily from the manufacture and distribution of ~~Scorpion~~of ~~brand~~high ~~and~~performance ~~private~~auto ~~label rocker arms and other automotive~~ parts, ~~through our~~particularly ~~Scorpion~~rocker ~~Racing division~~arms. Cash flows from our anodizing services are dependent upon the revenue generated from third party ~~customers which has~~ ~~decreased in 2009 due to the economic downturn and fewer~~ customers ~~ordering during the first three quarters~~. Anodizing services are primarily a component of our rocker arm manufacturing process which other manufacturers utilize from time to time for both automotive applications as well as non-automotive applications including medical components and equipment.

Since 2004, we have sold shares of our common stock and unit purchase options to non-US resident investors in offerings intended to meet the exemptions of Regulation S of the Securities Act of 1933, as amended (the “Securities Act”). In April 2009, we initiated a private offering to existing shareholders of the Company of up to 1,500,000 shares of preferred stock designated as Series A 10% Preferred Stock (the “Series A Preferred Shares”) at a purchase price of $10.00 per share. Under the terms of the offering, for a period of two years, the Company will pay a 10% dividend on each share of Series A Preferred stock, payable at the option of the Company, in cash or shares of common stock. Each share of the Series A Preferred Stock carries 10 votes on matters submitted to shareholders for voting purposes and is convertible into 10 shares of the Company’s common stock subject to anti-dilution in the event of the subdivision, combination or consolidation by stock split, stock dividend, combination or like event, into a greater or lesser number of shares of common stock. 22

For the nine months ended September 30, 2009, we have received funded subscriptions from the sale of our common stock of $1,165,214; $990,578 from the sale of unit purchase options; and $2,285,700 from the sale of the Series A Preferred stock, less aggregate selling expenses of $1,853,339 for aggregate net proceeds for the nine months ended September 30 of $4,441,492. Since we began our common stock Regulation S offering in 2004 and through September 30, 2009, we have raised gross proceeds from the sale of our common stock, unit purchase options and Series A Preferred stock of $28,403,927, $9,425,889 and $2,285,700 respectively, less aggregate selling expenses of $18,087,641 for aggregate net proceeds of $22,028,250.

The funds received from the sale of our common stock, unit purchase options and preferred stock have been used for operational purposes and equipment purchases offset by cash used in operating and investing activities for our products and services. We believe that our operating and capital requirements in connection with operations have been and will continue to grow and sustain operations. Because our primary uses of cash are for capital expenditures, research and development and construction costs including plant expansion and ongoing plant construction in Ocala, Florida, repayment of debt and pursuit of new business opportunities, we believe we are in a position to further delay or scale back these expenditures should the need arise. In addition, we will continue to seek capital from foreign investors to the extent such capital is available.

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~~Cash~~ We ~~Flows~~sold shares of our common stock, unit purchase options and shares of our Series A 10% Convertible Preferred stock to non-US resident investors in offerings intended to meet the exemptions of Regulation S of the Securities Act of 1933, as amended (the “Securities Act”). For the three months ended March 31, 2010, we only received funded subscriptions from the sale of our Series A 10% Convertible Preferred stock of $859,475 less aggregate selling expenses of $333,424 for aggregate net proceeds of $526,051. Since we began our Regulation S offering in 2004 and through March 31, 2010, we have raised gross proceeds from the ~~Nine~~sale ~~Months~~of ~~September~~our 30common stock, unit purchase options and Series A 10% ~~2009~~Convertible Preferred stock of $27,578,620, $8,863,656, and $3,016,422 respectively, less aggregate selling expenses of $17,827,470 for aggregate net proceeds of $21,631,603.

The funds received from the sale of our common stock, unit purchase options and Series A 10% Convertible Preferred stock have been used for operational purposes and equipment purchases offset by cash used in operating and investing activities for our products and services. We believe that our operating and capital requirements in connection with operations have been and will continue to grow and sustain operations. Because our primary uses of cash are for capital expenditures, research and development and construction costs including plant expansion and ongoing plant construction in Ocala, Florida, repayment of debt and pursuit of new business opportunities, we believe we are in a position to delay or scale back these expenditures should the need arise. In addition, we will continue to seek capital from foreign investors to the extent such capital is available.

Cash Flows for the Three Months March 31, 2010

Cash Flows from Operating Activities

Operating activities used net cash for the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010 of $~~893~~183,~~753~~848. Net cash used reflects an adjusted net loss for the ~~period~~year ended of ~~approximately~~ approximately $~~773~~82,~~654~~631, as adjusted for various items which impact net income but do not impact cash during the period, such as depreciation and amortization. Net cash used also reflects $~~120~~193,~~099~~040 of cash used to support net changes in working capital items, which included:

• a $~~139~~180,~~075~~193 increase in accounts receivable as a result of ~~slowed~~increased ~~collection efforts due to the economy~~sales; • ana $82105,~~104~~863 ~~increase~~decrease in inventory costs due to ~~the~~utilizing ~~use of~~ existing inventory for current production; • a $~~155~~21,~~997~~345 decrease in ~~other current assets as a result primarily of accepting delivery in the current quarter of inventory that was prepaid in the prior quarter; • a $54,917 decrease in~~ accounts payable and accrued expenses as a result of satisfying vendor liabilities ~~and~~from ~~cutting~~the ~~back~~increase onin ~~purchases~~sales during the first quarter of 2010.

Cash Flows used in Investing Activities

Our investing activities used $~~831~~124,~~690~~730 in net cash during the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010. Net cash used is composed entirely of capital expenditures ~~for~~ for equipment and outfitting the Ocala facility.

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Cash Flows from Financing Activities

Our financing activities provided net cash of $1503,~~583,266~~126 for the ~~nine~~three months ended ~~September~~ 30March 31, ~~2009~~2010. We raised approximately $~~506~~859,~~426,~~475 ~~$321,815 and $1,417,200~~ through the sale of our ~~common stock, unit purchase options and~~ Series A 10% Convertible Preferred stock, ~~respectively,~~ net of $~~967~~333,~~822~~424 in issuance costs. We also ~~received~~ repaid $~~305~~22,~~647~~924 in ~~proceeds~~principal ~~from~~on ~~new~~notes ~~capitalized~~payable ~~lease~~on ~~financing obtained in connection with certain robotic~~ equipment ~~that we acquired during the first quarter of 2009~~.

Financial Position

Our total assets increased $~~324~~201,~~598~~984 or 32% to $1011,~~047~~994,~~597~~901 as of ~~September~~March 3031, ~~2009 from~~2010 as compared to $911,~~723~~792,~~000~~917 as of December 31, ~~2008~~2009 primarily as a result of ana net increase in ~~property~~total ~~and~~current ~~equipment, net~~assets. The increase in ~~property~~total ~~and~~current ~~equipment,~~assets ~~net~~ was ~~primarily~~ primarily associated with ~~capital~~a ~~expenditures~~$180,193 ~~for~~or ~~equipment~~68% ~~and~~increase ~~outfitting~~in ~~the Ocala~~accounts ~~facility since the year ended December 31~~receivable, ~~2008 offset by~~ a $765,~~994~~542 or ~~decrease~~15% increase in other current assets, ~~as a result of our expensing prepaid expenses~~ and ~~not prepaying for current year and~~ a $~~142~~194,~~177~~548 ~~decrease~~increase in cash. Accounts receivable as a percentage of total current assets has fluctuated between 14% and 16% during 2009 as compared to 7% and 9% during 2008 and prior periods as a result of several vendors implementing EDI which delays payment to net 65-70 days.

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In May 2008, the Company entered into an agreement with a former director to buy back 10,000,000 shares of the Company’s common stock for the aggregate purchase price of $2,500,000. Under the terms of the Stock Purchase Agreement, the Company purchased the shares at a price of $0.25 per share with a cash purchase price of $500,000 and the balance of $2,000,000 in the form of a 7% Note due on January 1, 2013 and secured by and subject to a Mortgage and Security Agreement on the Company’s primary manufacturing facility and real property located in Broward County, Florida. There is no prepayment penalty under the Note and the Company reserves the right to withhold payments due under the Note in the event of breach of the Stock Purchase Agreement. The Company has the option to pay interest only at a rate of 10% per annum on the outstanding balance of the Note until the due date, at which time a balloon payment will be due. In January 2009, we exercised our option to pay interest only.

The Company may also extend the due date of the Note for one additional five-year period. If the Company opts to extend the Note, the Company will pay principal and interest in the amount of the greater of 10% per annum or prime plus 4% per annum on the remaining balance by making monthly payments in an amount that would result in equal monthly payments being made until final payment of the remaining balance on January 1, 2018. Under the terms of the Mortgage and Security Agreement executed on May 2, 2008, the Company retains the rights to collect all rents, issues and profits from the property and has the right to cure any Event of Default, as that term is defined in the Note, upon 30 days notice. As of September 30, 2009, we owe $1,686,514 on the Note and have made interest payments totaling $91,666.

Material Commitments

~~On September~~In 28May 2008, ~~2009,~~the weCompany ~~signed~~entered into an agreement with a ~~contract,~~former ~~subject~~director to ~~seller~~buy ~~financing~~back 10,000,000 shares of the Company’s common stock for the aggregate purchase price of $2,~~000~~500,000,. toUnder ~~purchase~~the ~~real~~terms ~~estate~~of ~~that~~the ~~adjoins~~Stock ~~our~~Purchase ~~Ocala~~Agreement, ~~facility. The~~the ~~property~~Company ~~consists~~purchased the shares at a price of 11$0.7325 ~~acres~~per share with a 60cash purchase price of $500,~~876~~000 ~~sq.~~and ~~foot~~the ~~building~~balance of ~~which 40~~$2,000,000 ~~sq.~~in ~~feet~~the ~~are~~form ~~currently~~of ~~leased~~a 7% Note due on January 1, 2013 and secured by and subject to ana ~~unrelated~~Mortgage ~~third~~and ~~party.~~Security IfAgreement ~~consummated~~on the Company’s primary manufacturing facility and real property located in Broward County, weFlorida. ~~intend~~There is no prepayment penalty under the Note and the Company reserves the right to ~~use~~withhold payments due under the ~~remaining~~Note ~~20,876~~in sqthe event of breach of the Stock Purchase Agreement. ~~feet~~The ~~for~~Company ~~additional~~has the option to pay ~~operations~~interest only at a rate of 10% per annum on the outstanding balance of the Note until the due date, at which time a balloon payment will be due. In January 2009, we exercised our option to pay interest only.

WeThe Company ~~had~~may also extend the due date of the Note for one ~~outstanding~~additional ~~purchase~~five-year ~~commitments~~period. If the Company opts to ~~purchase~~extend ~~raw~~the ~~materials~~Note, asthe Company will pay principal and interest in the amount of the greater of 10% per annum or prime plus 4% per ~~September~~annum 30on the remaining balance by making monthly payments in an amount that would result in equal monthly payments being made until final payment of the remaining balance on January 1, ~~2009~~2018. Under the terms of the Mortgage and Security Agreement executed on May 2, 2008, the Company retains the rights to collect all rents, issues and profits from ~~Eaton~~the ~~Steel~~property ~~for~~and ~~$60~~has the right to cure any Event of Default,~~000~~ as that term is defined in the Note, upon 30 days notice. As of March 31, 2010, we owe $1,686,514 on the Note and have made interest payments totaling $42,970.

~~As of~~On ~~September 30~~December 22, 2009, we ~~have~~signed ~~expended~~a ~~approximately~~mortgage ~~$2,378,003~~for toseller ~~complete the~~financing ~~construction and outfitting~~ of ~~our~~$2,000,000 ~~expansion facility in Ocala. The transition from our Ft. Lauderdale facility~~ to ~~the Ocala facility has been~~purchase ~~delayed due to significant unforeseen expenses that arose during the end of 2008 and through the current period related to installation of electrical systems, window installations and HVAC systems~~11.73 ~~These~~acres ~~delays, together~~ with ~~ongoing~~ ~~permitting and zoning delays and~~ a ~~pending~~60,876 ~~road~~sq ~~widening~~ft ~~project~~building ~~by Marion~~which ~~County~~adjoins ~~that will impact~~ our ~~property~~Ocala ~~have~~facility. ~~pushed our completion date~~As ~~estimates to the third quarter~~ of ~~2010.~~March ~~In addition~~31, ~~as initially budgeted~~2010, we ~~intended~~ tohave ~~keep~~received ~~our~~rental ~~anodizing~~income ~~division~~ in ~~our Fort Lauderdale location; however, management has reassessed~~ the ~~costs~~amount ~~and the Company’s needs to onsite services and has revised the budget and projections to include the costs~~ of ~~building~~ ~~out and relocating anodizing to the Ocala location. We believe that an additional~~ $~~350~~55,~~000~~565 ~~remains to be spent during the last quarter of 2009 to complete the construction~~ and ~~outfitting of our expansion facility in Ocala~~ ~~which will include our anodizing division. Consequently, we~~ have ~~revised~~made ~~our estimates~~interest ofpayments ~~future~~in ~~costs necessary to make~~ the ~~facility~~amount ~~operational~~of ~~to reflect an additional~~ $~~728~~30,~~003 in addition to the $2,~~000~~,000 initially budgeted for completion of the facility~~.

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We had no outstanding purchase commitments to purchase raw materials as of March 31, 2010.

In 2008, we began building out a 36,000 sq ft production facility in Ocala Florida to expand our automotive and medical component manufacturing which we initially forecast opening in early 2009 and budgeted at a build out cost of $2,000,000. We have had to delay the opening of our Ocala facility due to construction, zoning, permitting, and other delays beyond our control, together with costs and a general freeze on credit and funding to fully fund construction during 2009. As a result, we have revised our initial budget to $3.2 million and extended the move date to the third quarter of 2010. As of March 31, 2010, we have spent approximately $2,672,651 for construction costs, permitting and new equipment purchases and believe we will be able to stay within the revised budget to make our Ocala facility fully operational by our target date. We believe that we will have enough cash on hand from our investment activities and operations to finance additional expenditures and do not believe that prolonged problems or delays will threaten the commercial viability of the Ocala facility; however, we may not have anticipated all the logistical impediments and obstacles and may incur further unanticipated delays and additional costs which could adversely affect available cash.

Dividends

We have not paid any dividends.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.


ITEM 4T.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in its reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As ~~required~~ required by SEC Rule 13a-15(b), the Company carried out an evaluation, under ~~the~~ the supervision and with the participation of Robert Stopanio, our President ~~and~~ and Principal Executive Officer and Karen Rodgers, our Controller and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based upon their evaluation, Robert Stopanio and Karen Rodgers, concluded that the Company’s disclosure controls and procedures were effective as of ~~September~~March 3031, ~~2009~~2010.

~~Changes in Internal Control Over Financial Reporting~~ 25

There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2009, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2010, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

NoWe ~~change~~are ~~since~~occasionally subject to legal proceedings and claims that arise in the ~~date~~ordinary course of our ~~Annual~~business. ~~2008~~It ~~Form~~is ~~10-K~~impossible for us to predict with any certainty the outcome of pending disputes and we cannot predict whether any liability arising from pending claims and litigation will be material in relation to our consolidated financial position or results of operations. As of March 31, 2010, we are currently not a party to any material litigation and are not aware of any threatened litigation that would have a material adverse effect on our business.


ITEM 1A.	RISK FACTORS

Please consider the following risk factors carefully. The descriptions below include material changes to the description of the risk factors previously disclosed in Item 1A of our ~~2008~~2009 Annual Report. The risks described below and in our ~~2008~~2009 Annual Report could materially and adversely affect our business, financial ~~condition~~ condition and results of operations. We also may be adversely affected by risks ~~not~~ not currently known or risks that we do not currently consider to be material.

~~ONGOING~~ DELAYS AND UNANTICIPATED COSTS IN CONNECTION WITH THE RELOCATION OF OUR PRIMARY MANUFACTURING FACILITY TO OCALA COULD ~~ADVERSELY~~ ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND LIQUIDITY.

To facilitate anticipated growth from the automotive and medical component industry, in July 2007 we purchased a 36,000 square foot single story building on 10.5 acres in Ocala, Florida and in 2008 began refurbishing the existing ~~building~~ building with the intention of moving most of our manufacturing operations from ~~Fort~~ Fort Lauderdale to Ocala by the first quarter of 2007. We initially budgeted $2 million for the refurbishment and relocation; however, we have had to revise our budget and extend our move in date as a result of unforeseen delays with permitting, zoning and a pending road widening project by Marion County. InWe ~~addition,~~experienced wefurther ~~have~~setbacks ~~revised~~during ~~our~~2009 ~~initial~~due ~~plans~~ to ~~include~~restrictions ~~build-out~~on cash and ~~relocation~~a general freeze on credit and funding to fully fund construction during 2009. As a result of ~~our~~these ~~anodizing~~delays ~~division~~and ~~from~~unanticipated costs, we revised our ~~Fort~~initial ~~Lauderdale~~budget to ~~location~~$3.2 million and extended the move date to ~~Ocala~~the third quarter of 2010. As of ~~September~~March 3031, ~~2009~~2010, we have ~~expended~~spent approximately $2,~~378~~672,~~003~~651 for construction costs, permitting and new equipment purchases, and believe we will ~~need~~be ~~an additional~~able ~~$350,000~~ to ~~make~~stay within the ~~facility~~revised ~~fully~~budget ~~operational.~~to Asmake aour ~~result of the delays, we anticipate that the~~ Ocala facility ~~will be~~ fully operational by ~~the~~our ~~third~~target ~~quarter of 2010~~date. We believe that we will have enough cash on hand from ~~our~~ our investment activities and operations to finance additional expenditures and do do not believe that prolonged problems or delays will threaten the commercial viability of the Ocala facility; however, we may not have anticipated all the logistical impediments and obstacles and may incur further unanticipated delays and additional costs which could adversely affect our liquidity.

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~26

For the three months ended September 30, 2009, we raised a total of $2,245,441 of which $506,426 was generated through the sale of our common stock; $321,815 was generated through the sale of unit purchase options; and $1,417,200 was generated from the sale of Series A Preferred stock. For common stock sales, 45,833 shares were authorized for issuance to foreign investors priced between $1.00 and $3.00, of which, certificates for 1,000 shares were issued at September 30, 2009. For unit purchase options, we issued 643,631 units to existing shareholders at a price of $.50 per Unit. Each Unit Purchase Option consists of two shares of common stock exercisable at $1.00 per share until December 31, 2011. As of September 30, 2009, there were 121,120 certificates for shares of Series A Preferred stock issued and outstanding to foreign investors at a price of $10.00 per share with the balance of 20,600 shares authorized for issuance.

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~~Commissions and~~ITEM ~~finder’s fees were incurred on the above sales in the aggregate amount of $967,822~~2. ~~The~~UNREGISTERED ~~sales~~SALES ~~were~~OF ~~made~~EQUITY toSECURITIES ~~existing~~AND ~~shareholders~~USE inOF reliance upon the transaction exemption afforded by Regulation S promulgated by the Securities and Exchange Commission under the Securities Act. The shareholders have received information concerning the Company and have the opportunity to ask questions about the Company. There were no issuances to stockholders residing in the United States. PROCEEDS

For the three months ended March 31, 2010, we raised a total of $859,475 through the sale of our Series A 10% Convertible Preferred stock. During the first quarter of 2010, we issued 68,320 shares of Series A 10% Convertible Preferred stock to foreign investors at a price of $10.00 per share. We incurred commissions and finder’s fees on the above sales in the aggregate amount of $333,424. The sales were made to existing shareholders in reliance upon the transaction exemption afforded by Regulation S promulgated by the Securities and Exchange Commission under the Securities Act. The shareholders have received information concerning the Company and have the opportunity to ask questions about the Company. There were no issuances to stockholders residing in the United States.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. ~~SUBMISSION~~OTHER ~~OF MATTERS TO A VOTE OF SECURITY HOLDERS~~INFORMATION

(a) None. (b) There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors.

ITEM 5. ~~OTHER INFORMATION~~EXHIBITS

On July 17, the Company authorized an amendment to the Certificate of Designations of the Company’s Series B Preferred stock to clarify transfer and conversion restrictions. Articles of Amendment to the Company’s Articles of Incorporation were filed on November 9, 2009. As amended, holders of the Series B Preferred Stock may convert shares to common stock of the Company only upon a change of control in the management and ownership of the Company. Further, holders of Series B Preferred Stock may only transfer the shares to immediate family members. As of the date of this Report, no shares of Series B Preferred Stock have been issued. All disclosures regarding the amended terms and conditions of the Series B Preferred Stock set forth in this Report are qualified by and subject to the rights, preferences and designations set forth in the Amended and Restated Certificate of Designation of Preferences and Rights of the Series B Preferred Stock attached as an exhibit to this Report.


	No.		Description

	31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of the Company
	31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of the Company
	32.1		Section 1350 Certification of Principal Executive Officer of the Company
	32.2		Section 1350 Certification of Principal Financial Officer of the Company

~~There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors.~~ 27

ITEM 6. EXHIBITS

	No.	Description
3.1		Amended and Restated Certificate of Designations of Series B Preferred Stock as filed with the Florida Secretary of State on November 9, 2009
31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of the Company
31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of the Company
32.1		Section 1350 Certification of Principal Executive Officer of the Company
32.2		Section 1350 Certification of Principal Financial Officer of the Company

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 16, 2009		SCORPION PERFORMANCE, INC.
Date: May 14, 2010	SCORPION PERFORMANCE, INC.
	/s/ Robert Stopanio	~~/s/ Robert Stopanio~~
		President and Principal Executive Officer
	Robert Stopanio
	President and Principal Executive Officer

In accordance with the Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Robert Stopanio	~~President and Principal~~	~~November 16, 2009~~
Robert Stopanio	President and Principal	May 14, 2010
	Executive Officer
/s/ Karen Rodgers	~~Controller and Principal~~	~~November 16, 2009~~
Karen Rodgers	Controller and Principal	May 14, 2010
	Financial Officer

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