According to the 2004 Yoga in America Study, as published by the Yoga Journal on December 8, 2004, the yoga apparel market was estimated to be approximately $500 million in 2004, part of the larger market for yoga products and services estimated at approximately $2.95 billion.

The yoga apparel market has been, and continues to be, supported by a growing number of participants in yoga and related activities. In 2006, SGMA International, a global business trade association for the sports products industry, estimated that participation in yoga and related activities grew approximately 18% from 2004 to 2005.

In addition to this growth in the yoga apparel market, the broader sports apparel market grew 8.3% in 2006 to over $47 billion as estimated by The NPD Group Consumer Tracking Service.

The Company’s yoga-inspired apparel is marketed under the Company’s athletica brand name. The Company offers premium apparel that is optimized for performance, comfort, functionality and style.

The Company offers a comprehensive line of performance apparel and accessories for both women and men. The Company’s apparel assortment, including items such as fitness pants, shorts, tops and jackets, is designed for healthy lifestyle activities such as yoga, dance, running and general fitness. The Company’s fitness-related accessories include an array of items such as bags, socks, underwear, yoga mats, instructional yoga DVDs, water bottles and headbands.

The Company’s athletic apparel is designed and manufactured using cutting-edge fabrics that deliver maximum function and athletic fit.

The Company also offers a line of casual, organic products made from sustainable recyclable materials such as soy, bamboo and vitasea. These products are typically sold under the oqoqo brand name and feature stylish casual designs.

The Company’s products are constructed with advanced sewing techniques such as flat seaming, and ’rip-out’ labels which increase comfort and functionality by reducing skin irritation and strengthening important seams. The Company’s apparel products include innovative features to promote convenience, such as pockets designed to hold credit cards, keys, digital audio players, and heart rate monitors, or clips for heart rate transmitters.

Gross profit increased $33.0 million, or 76.9%, to $76.0 million for fiscal 2006 from $43.0 million for fiscal 2005.

Selling, general and administrative expenses increased $26.1 million, or 98.9%, to $52.5 million for fiscal 2006 from $26.4 million for fiscal 2005.

Interest income remained relatively constant at $141,736 for fiscal 2006 from $54,562 for fiscal 2005.

Interest expense remained relatively constant at $47,348 for fiscal 2006 from $51,020 for fiscal 2005.

Net income increased $6.3 million to $7.7 million for fiscal 2006 from $1.4 million for fiscal 2005.