It is believed that action sports are a permanent and growing aspect of youth culture, reaching not only consumers that actually participate in action sports, but also those who seek brands and styles that fit a desired action sports image. According to Board-Trac, a market research firm, retail sales of skateboard, snowboard and surf/bodyboard apparel, equipment and accessories in the United States were estimated to be approximately $12.1 billion in 2003. Events such as the ESPN X Games, the inclusion of snowboarding as a medal event in the Winter Olympics and the national recognition of leading board sport athletes have broadened general awareness of the action sports lifestyle.

Teens and young adults are the primary participants in action sports. This concentrated interest is appealing, as teens have significant spending power. According to Teen Research Unlimited, a 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. It is believed that teens enjoy shopping in malls and purchasing clothing and fashion-related merchandise.

The teenage and young adult retail apparel, hardgoods and accessories industry is highly competitive. The companies compete for vendors, teenage and young adult customers, suitable store locations and qualified store associates and management personnel.

As of January 29, 2005, the Company operated 140 stores with an average of approximately 2,600 square feet per store in 18 states. All of the Company’s stores are leased and substantially all are located in shopping malls of different types.

The Company’s stores feature an industrial look with concrete floors and open ceilings, dense merchandise displays, action sports focused posters and signage and popular music, all of which are consistent with the look and feel of an independent action sports specialty shop. Most of the Company’s stores have couches and action sports oriented video game stations that are intended to encourage the customers to shop for longer periods of time.

The Company’s store operations are currently organized into regions and districts. Each region is managed by a regional manager, responsible for approximately 50 stores. The Company employs one district sales manager per district, responsible for the sales and operations of approximately 10 stores. Each of the Company’s stores is typically staffed with one store manager, one or more assistant managers and two or more store associates, depending on seasonality. The number of store associates the Company employs generally increases during peak selling seasons, particularly the back-to-school and the winter holiday seasons.

The Company provides its managers with the knowledge and tools to succeed through comprehensive training programs and the flexibility to manage their stores to meet customer demands. While general guidelines for merchandise assortments, store layouts and in-store visuals are provided by its home office, the Company gives its store managers substantial discretion to tailor their stores to the individual market and empower them to make store-level business decisions.

The Company’s store associates generally have an interest in the action sports lifestyle and are knowledgeable about the Company’s products. The Company’s store associates receive extensive training from their managers to improve their product expertise and selling skills.

The Company uses its website primarily as an information source for its customers. The Company’s website provides current information on the upcoming events and promotions, store locations and merchandise selection. The Company also sells products directly through its website.

Gross margin for fiscal year ended January 29, 2005 was $50.4 million compared with $36.5 million for fiscal year ended January 31, 2004, an increase of $13.9 million, or 38.0%.

Selling, general and administrative, expenses in fiscal year ended January 29, 2005 were $38.4 million compared with $29.1 million in fiscal year ended January 31, 2004, an increase of $9.3 million, or 32.1%.

Operating profit increased by $4.5 million, or 61.0%, to $12.0 million in fiscal year ended January 29, 2005 from $7.5 million in fiscal year ended January 31, 2004.

Net income increased by $2.8 million, or 62.4%, to $7.3 million in fiscal year ended January 29, 2005 from $4.5 million in fiscal year ended January 31, 2004.