It is believed teens and young adults are the primary participants in boardsports and that this concentrated interest among teens and young adults represents a particularly appealing market given their spending habits on fashion-related apparel. According to Teenage Research Unlimited, an independent market research firm, spending by U.S. teens was projected to be $169 billion in 2004 and has increased at an average of 5% per year over the past seven years.

According to Board-Trac, an independent market research firm, retail sales in the United States for apparel, equipment and accessories related to action sports (which includes boardsports, BMX, motocross and other similar activities) were estimated to be approximately $12.1 billion in 2003. It is believed that action sports are a permanent and growing aspect of youth culture, reaching not only consumers who actually participate in an action sport, but also those who seek brands that fit a desired action sports image. It is believed that events such as the X Games, the inclusion of snowboarding as a medal event in the Winter Olympics and the national recognition of leading boardsport athletes have broadened general awareness of the action sports youth lifestyle.

The Company has four primary product categories: mens, girls, boys and snow. The principal products sold within these categories are t-shirts and fleese; tops, jackets and suits; bottoms; denim; boardshorts; outerwear; and accessories.

The majority of the Company’s t-shirts and fleese display a distinctive art style, utilizing unique treatments, placements of screened images, designs and embroideries. The Company’s knit and woven tops, casual jackets, blazers and suits are recognizable for their bold and creative styling. The Company designs a variety of casual and dress pants, shorts and skirts. The Company’s bottoms are generally made using cotton or cotton-blend fabrics. The Company offers denim products in a variety of washes and fits to suit individual preferences for appearance and functionality. The Company’s boardshorts are designed with technical features such as welded seams, mesh paneling and enhanced waterproof zipper fly technology. The Company’s outerwear products consist of technically advanced jackets and pants that are designed to meet the demands of snowboarding and other outdoor winter sports. The Company’s outerwear is designed with a number of technical features and fabrics. Some of the technical aspects of the outerwear include taped and welded seam construction, waterproof zippers and the Company’s patent pending Zip-Tech jacket/pant connection system.

The Company also sells a variety of accessories such as hats, wallets, ties, belts and bags to complement its clothing lines.

The Company’s product categories are offered in a variety of lines. Each of these lines has unique fashion and design characteristics that broaden the overall offering. The Company also partners with its team riders to design certain signature product styles, called Vco.Operative, such as three denim styles designed in conjunction with professional skateboarders Geoff Rowley, Mark Appleyard and Dustin Dollin; a limited edition blazer designed and inspired by professional snowboarder and skateboarder Shaun White; and the Bruce Irons Amphibulator boardshort, which includes high performance features inspired and tested by professional surfer Bruce Irons.

The Company also generates revenues from the sale of music produced by its label and films produced by its film production division.

The Company’s design calendar is typically organized around four major seasons: spring/ summer, fall, snow and holiday.

For the year ended December 31, 2004, gross profit increased $18.1 million, or 49.0%, to $55.0 million compared to $36.9 million for the year ended December 31, 2003.

For the year ended December 31, 2004, selling, general and administrative expenses increased $7.7 million, or 33.4%, to $30.6 million compared to $22.9 million for the year ended December 31, 2003.

Operating income for the year ended December 31, 2004 increased $10.4 million to $24.4 million compared to $14.0 million for the year ended December 31, 2003.

Net income increased $10.3 million, or 72.4%, to $24.6 million for the year ended December 31, 2004 from $14.3 million for the year ended December 31, 2003.