Flash memory, like traditional storage media such as floppy disks or CD-ROMs, allows data to be easily transported from one device to another. However, unlike traditional disk drives, Flash data storage products have no moving or mechanical parts and are considerably smaller, lighter and more rugged, and consume substantially less power than traditional disk drives, making Flash a preferred storage alternative for many applications. The development of Flash memory has led to the proliferation of consumer electronic devices designed to take advantage of these characteristics. In turn, the growth in shipments of these consumer electronic devices and their unique and expanding storage requirements have led to increasing demand for Flash data storage products.

Semico Research estimates that the Flash memory card market will grow from $2.0 billion in 2002 to $11.9 billion in 2006, a 56.4% compound annual growth rate. This growth is believed to be driven by the continuing proliferation of consumer electronic products that use Flash memory cards as their primary data storage device, such as digital cameras, multimedia cell phones, MP3 players and PDAs.

USB Flash drives are self-contained products that use Flash memory as their data storage medium. USB Flash drives are beginning to replace floppy disk drives because of their small size, data storage capacity, ease of use, rewrite capability, speed and security. The market for USB Flash drives will grow at an even greater rate. USB Flash drives are beginning to replace floppy disk drives because of their small size, ease of use, rewrite capability, speed and security. Gartner Dataquest estimates that the worldwide market for USB Flash drives will grow from $135.6 million in 2002 to $1.7 billion in 2007, a 66.3% compound annual growth rate.

The Company competes in three primary segments of technology products: Flash, DRAM, and graphics cards.

The Company markets a variety of Flash memory cards, USB Flash drives and Flash memory card readers and adapters. The Company’s Flash memory cards are used primarily in consumer electronic devices, such as digital cameras, MP3 players and PDAs.

The Company offers a variety of DRAM modules including a wide range of single in-line memory modules, or SIMMs, dual in-line memory modules, or DIMMs, and small outline DIMMS, or SO DIMMs. The Company’s DRAM modules are used in desktop PCs, laptops, workstations, servers and telecommunications and Internet infrastructure equipment. The Company’s standard DRAM modules are available in various densities up to 4GB. The Company also offers many configurations utilizing different DRAM architectures, such as SDRAM, DDR, Rambus, EDO and FPM. The Company also offers stacked DRAM modules.

The Company markets graphics cards with a wide range of performance characteristics to the consumer and professional user. These cards, co-branded with NVIDIA, are sold through the Company’s Consumer division as upgrades to a user's existing graphics card.

The Company’s Verto brand graphics cards utilize NVIDIA's GeForce family of desktop graphics processors. These include the GeForce FX, GeForce4 and GeForce2. The GeForce FX family represents NVIDIA's leading-edge consumer technology, designed for the enthusiast consumer market. Each product within the GeForce family is designed to deliver the highest speed, sharpest resolution and most features available of any graphics card in its respective price range.

Gross profit was $34.2 million for the nine months ended September 30, 2002, compared with $35.4 million for the nine months ended September 30, 2003.

Total operating expenses were $36.7 million for the nine months ended September 30, 2002 compared with $31.3 million for the nine months ended September 30, 2003.