**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**WASHINGTON, D.C. 20549

**FORM 10-Q**

**QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934 FOR THE QUARTERLY PERIOD ENDEDAUGUST 4, 2007.**

**CommissionFile Number:  000-50659**

**GANDERMOUNTAIN COMPANY**(Exact name ofRegistrant as Specified in its Charter)

| **Minnesota**                                                    |   | **180  East Fifth Street, Suite 1300  Saint Paul, Minnesota 55101  (651) 325-4300**                                           |   | **41-1990949**                        |
|------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|
| (State or Other  Jurisdiction of  Incorporation or Organization) |   | (Address,  including zip code, and  telephone number, including area  code,of Registrant’s Principal  Executive Offices) |   | (I.R.S. Employer  Identification No.) |

 

Indicate by check mark whether the registrant (1)has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2 ofthe Exchange Act. check one o large accelerated filer o acceleratedfiler x non-accelerated filer

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x

Indicate the number of shares outstanding of each ofthe issuer’s classes of common stock, as of the latest practicable date:  Common Stock, $.01 par value; 20,362,097shares outstanding as of September 4, 2007.

 

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**GANDERMOUNTAIN COMPANY**

**QUARTERLYPERIOD ENDED AUGUST 4, 2007**

**Index**
| ** **                    | ** ** | **Page**                                                                                    |
|-------------------------------|------------|---------------------------------------------------------------------------------------------|
| PART I. FINANCIAL INFORMATION |       | 2                                                                                           |
| Item 1.                       |       | Unaudited Financial Statements                                                              |   | 2 |
|                          |       | Statements of Operations                                                                    |   | 3 |
|                          |       | Balance  Sheets                                                                             |   | 2 |
|                          |       | Statements of Cash Flows                                                                    |   | 4 |
|                          |       | Notes to Unaudited Financial Statements                                                     |   | 5 |
| Item 2.                       |       | Management’s Discussion and Analysis of Financial  Condition and Results of Operations |   | 9 |
| Item 3.                       |       | Quantitative and Qualitative Disclosures About Market  Risk                                 |   | 19 |
| Item 4.                       |       | Controls and Procedures                                                                     |   | 19 |
|                          |       |                                                                                        |   |   |
| PART  II. OTHER INFORMATION   |       | 20                                                                                          |
| Item  1.                      |       | Legal  Proceedings                                                                          |   | 20 |
| Item  1A.                     |       | Risk Factors                                                                                |   | 20 |
| Item 2.                       |       | Unregistered Sales of Equity Securities and Use of  Proceeds                                |   | 20 |
| Item 3.                       |       | Defaults Upon Senior Securities                                                             |   | 20 |
| Item 4.                       |       | Submission of Matters to a Vote of Security Holders                                         |   | 20 |
| Item  5.                      |       | Other  Information                                                                          |   | 21 |
| Item 6.                       |       | Exhibits                                                                                    |   | 21 |
| SIGNATURES                    |       | 22                                                                                          |

 

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**PART I. FINANCIAL INFORMATION**

**ITEM 1.  UNAUDITED FINANCIALSTATEMENTS**

**Gander Mountain Company**

**Statements of Operations - Unaudited**

**(In thousands, except per share data)**
| ** **                                  | ** ** | **13 Weeks Ended** | ** ** | **26 Weeks Ended** | ** ** |
|---------------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                  | ** ** | **August 4,**           | ** ** | **July 29,**            | ** ** | **August 4,** | ** ** | **July 29,** | ** ** |
| ** **                                  | ** ** | **2007**                     | ** ** | **2006**                     | ** ** | **2007** | ** ** | **2006** | ** ** |
| Sales                                       |       | $                            | 216,511    |                         | $          | 182,482 |   | $ | 392,260 |   | $ | 338,062 |   |
| Cost of goods  sold                         |       | 164,975                      |       | 138,408                      |       | 306,848 |   | 266,996 |   |
| Gross profit                                |       | 51,536                       |       | 44,074                       |       | 85,412 |   | 71,066 |   |
|                                        |       |                         |       |                         |       |   |   |   |   |
| Operating  expenses:                        |       |                         |       |                         |       |   |   |   |   |
| Store operating expenses                    |       | 43,728                       |       | 36,472                       |       | 84,279 |   | 72,327 |   |
| General and administrative expenses         |       | 11,703                       |       | 9,606                        |       | 23,153 |   | 18,959 |   |
| Pre-opening expenses                        |       | 1,234                        |       | 708                          |       | 1,964 |   | 1,473 |   |
| Loss from  operations                       |       | (5,129                       | )          | (2,712                       | )          | (23,984 | ) | (21,693 | ) |
| Interest  expense, net                      |       | 4,530                        |       | 4,847                        |       | 8,506 |   | 8,833 |   |
| Loss before  income taxes                   |       | (9,659                       | )          | (7,559                       | )          | (32,490 | ) | (30,526 | ) |
| Income tax  provision                       |       | —                       |       | —                       |       | — |   | — |   |
| Net loss                                    |       | $                            | (9,659     | )                            | $          | (7,559 | ) | $ | (32,490 | ) | $ | (30,526 | ) |
|                                        |       |                         |       |                         |       |   |   |   |   |
| Basic and  diluted loss per share           |       | $                            | (0.48      | )                            | $          | (0.53 | ) | $ | (1.61 | ) | $ | (2.14 | ) |
|                                        |       |                         |       |                         |       |   |   |   |   |
| Weighted average common  shares outstanding |       | 20,312                       |       | 14,293                       |       | 20,201 |   | 14,289 |   |

 

See accompanying notes to unaudited financial statements.

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**Gander Mountain Company**

**BalanceSheets**

**(In thousands)**
| ** **                                                                                                              | ** ** | **August 4,** | ** ** | **February 3,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|----------------------|------------|
| ** **                                                                                                              | ** ** | **2007**           | ** ** | **2007**             | ** ** |
| ** **                                                                                                              | ** ** | **(Unaudited)**    | ** ** | ** **           | ** ** |
| **Assets**                                                                                                              |       |               |       |                 |       |
| Current assets:                                                                                                         |       |               |       |                 |       |
| Cash and cash  equivalents                                                                                              |       | $                  | 1,442      |                 | $          | 1,342 |   |
| Accounts  receivable                                                                                                    |       | 17,390             |       | 10,337               |       |
| Inventories                                                                                                             |       | 418,936            |       | 349,120              |       |
| Prepaids and  other current assets                                                                                      |       | 15,183             |       | 10,681               |       |
| Total current assets                                                                                                    |       | 452,951            |       | 371,480              |       |
| Property and equipment,  net                                                                                            |       | 152,393            |       | 144,439              |       |
| Other assets, net                                                                                                       |       | 6,187              |       | 5,698                |       |
| Total assets                                                                                                            |       | $                  | 611,531    |                 | $          | 521,617 |   |
| ** **                                                                                                              |       |               |       |                 |       |
| **Liabilities and shareholders’  equity**                                                                          |       |               |       |                 |       |
| Current liabilities:                                                                                                    |       |               |       |                 |       |
| Borrowings under  credit facility                                                                                       |       | $                  | 244,487    |                 | $          | 168,485 |   |
| Accounts payable                                                                                                        |       | 98,015             |       | 62,868               |       |
| Accrued and  other current liabilities                                                                                  |       | 47,781             |       | 48,032               |       |
| Current  maturities of long term debt                                                                                   |       | 3,809              |       | 1,677                |       |
| Total current  liabilities                                                                                              |       | 394,092            |       | 281,062              |       |
|                                                                                                                    |       |               |       |                 |       |
| Long term debt                                                                                                          |       | 22,171             |       | 16,421               |       |
| Other long term  liabilities                                                                                            |       | 27,171             |       | 27,343               |       |
|                                                                                                                    |       |               |       |                 |       |
| Shareholders’ equity:                                                                                              |       |               |       |                 |       |
| Preferred stock  ($.01 par value, 5,000,000 shares authorized; no shares issued and  outstanding)                       |       | —             |       | —               |       |
| Common stock  ($.01 par value, 100,000,000 shares authorized; 20,361,947 and 20,027,788  shares issued and outstanding) |       | 204                |       | 200                  |       |
| Additional  paid-in-capital                                                                                             |       | 256,200            |       | 252,408              |       |
| Notes receivable  from shareholders                                                                                     |       | (4,100             | )          | (4,100               | )          |
| Accumulated  deficit                                                                                                    |       | (84,207            | )          | (51,717              | )          |
| Total shareholders’  equity                                                                                        |       | 168,097            |       | 196,791              |       |
| Total liabilities and shareholders’ equity                                                                         |       | $                  | 611,531    |                 | $          | 521,617 |   |

 

See accompanyingnotes to unaudited financial statements.

 

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**Gander Mountain Company**

**Statementsof Cash Flows - Unaudited**

**(Inthousands)**
| ** **                                                                   | ** ** | **26 Weeks Ended** | ** ** |
|------------------------------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                                   | ** ** | **August 4,**           | ** ** | **July 29,** | ** ** |
| ** **                                                                   | ** ** | **2007**                     | ** ** | **2006** | ** ** |
| **Operating  activities**                                                    |       |                         |       |   |   |
| Net loss                                                                     |       | $                            | (32,490    | ) | $ | (30,526 | ) |
| Adjustments to  reconcile net loss to net cash used in operating activities: |       |                         |       |   |   |
| Depreciation and amortization                                                |       | 12,684                       |       | 10,889 |   |
| Stock-based compensation expense                                             |       | 743                          |       | 595 |   |
| Loss on disposal of assets                                                   |       | 34                           |       | 618 |   |
| Change in operating assets and liabilities:                                  |       |                         |       |   |   |
| Accounts receivable                                                          |       | (7,053                       | )          | (7,901 | ) |
| Inventories                                                                  |       | (69,816                      | )          | (26,490 | ) |
| Prepaid expenses and other assets                                            |       | (5,376                       | )          | (1,619 | ) |
| Accounts payable and other liabilities                                       |       | 33,499                       |       | 22,714 |   |
| Net cash used in  operating activities                                       |       | (67,775                      | )          | (31,720 | ) |
| ** **                                                                   |       |                         |       |   |   |
| **Investing  activities**                                                    |       |                         |       |   |   |
| Purchases of  property and equipment                                         |       | (17,475                      | )          | (17,241 | ) |
| Proceeds from  sale of assets                                                |       | —                       |       | 2,100 |   |
| Net cash used in  investing activities                                       |       | (17,475                      | )          | (15,141 | ) |
|                                                                         |       |                         |       |   |   |
| **Financing  activities**                                                    |       |                         |       |   |   |
| Borrowings under  credit facility, net of repayments                         |       | 76,002                       |       | 40,862 |   |
| Proceeds from  long term debt                                                |       | 7,582                        |       | 5,946 |   |
| Reductions in  long term debt                                                |       | (1,287                       | )          | (397 | ) |
| Proceeds from  exercise of stock options and stock sales, net                |       | 3,053                        |       | 133 |   |
| Net cash  provided by financing activities                                   |       | 85,350                       |       | 46,544 |   |
|                                                                         |       |                         |       |   |   |
| Net increase /  (decrease) in cash                                           |       | 100                          |       | (317 | ) |
| Cash, beginning  of period                                                   |       | 1,342                        |       | 1,580 |   |
| Cash, end of period                                                          |       | $                            | 1,442      |   | $ | 1,263 |   |

 

See accompanyingnotes to unaudited financial statements.

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**Gander Mountain Company**

**Notes to Unaudited Financial Statements**

**Quarterly Period Ended August 4, 2007**

**1. Basis of Presentation**

The accompanying unaudited financial statements of Gander MountainCompany (“we” or “us”) have been prepared in accordance with the requirementsfor Form 10-Q and do not include all the disclosures normally required inannual financial statements prepared in accordance with U.S. generally acceptedaccounting principles. The interim financial information as of August 4, 2007and for the 13 and 26 weeks ended August 4, 2007 and July 29, 2006, isunaudited and has been prepared on the same basis as the audited annualfinancial statements. In the opinion of management, this unaudited informationincludes all adjustments necessary for a fair presentation of the interimfinancial information. All of these adjustments are of a normal recurringnature. These interim financial statements filed on this Form 10-Q and thediscussions contained herein should be read in conjunction with the annual financialstatements and notes included in our Annual Report on Form 10-K for the fiscalyear ended February 3, 2007, as filed with the Securities and ExchangeCommission, which includes audited financial statements for our three fiscalyears ended February 3, 2007.

Our business is seasonal in nature and interim results may not beindicative of results for a full year. Historically, we have realized more ofour sales in the latter half of our fiscal year, which includes the hunting andholiday seasons. Our business is also impacted by the timing of new storeopenings. Both variation in seasonality and new store openings impact theanalysis of the results of operations and financial condition for comparableperiods.

**2. Stock-Based Compensation**

We have three share-based compensation plans which are the 2004 OmnibusStock Plan, the 2002 Stock Option Plan and the Employee Stock Purchase Plan. Inaddition certain approved stock-based option awards were granted in fiscal 1998and fiscal 2002 and were not under a specific option plan program. We are nolonger authorized to grant any awards under the 2002 Stock Option Plan.  As of August 4, 2007, there were a total of3,949,627 options to purchase common stock outstanding under all of our stockoption plans and non-plan option awards, with a weighted average exercise priceof $ 10.39 and a weighted average remaining life of 7.5 years.  There were 2,576,886 options that wereexercisable as of August 4, 2007 with a weighted-average exercise price of$11.57.

Stock-based compensation expense for the 13 weeks ended August 4, 2007and July 29, 2006, was $350,000 and $294,000, respectively. Stock-basedcompensation expense for the 26 weeks ended August 4, 2007 and July 29, 2006,was $743,000 and $595,000, respectively. As of August 4, 2007, there was approximately $4.2 million ofunrecognized compensation expense related to stock options that is expected tobe recognized over a weighted-average period of 3.0 years.

During our second quarter of fiscal 2007, there were 166,041 optionsexercised with an aggregate intrinsic value of $853,000, which generated$1,430,000 in net cash proceeds for the company.  For our first half of fiscal 2007, there were323,393 options exercised with an aggregate intrinsic value of $1,237,000,which generated $2,932,000 million in net cash proceeds for the company.  There were no option exercises during thefirst half of fiscal 2006.

As of August 4, 2007, there were 758,492 shares available for futuregrant under the 2004 Omnibus Stock Plan.

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|                                                               | ** ** | **13 weeks - August 4, 2007** | ** ** | **13 weeks - July 29, 2006** | ** ** |
|---------------------------------------------------------------|------------|--------------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                                                    | ** ** | **Number of  Shares Under  Option**          | ** ** | **Weighted-  Average  Exercise Price**           | ** ** | **Number of  Shares Under  Option** | ** ** | **Weighted-  Average  Exercise Price** | ** ** |
| Outstanding -  Beginning                                      |       | 3,756,545                                              |       | $                                                     | 10.20      |   | 3,957,662 |   | $ | 10.40 |   |
| Granted                                                       |       | 442,300                                                |       | 12.03                                                 |       | 138,100 |   | 7.82 |   |
| Exercised                                                     |       | (166,041                                               | )          | 8.61                                                  |       | — |   | — |   |
| Forfeited                                                     |       | (83,177                                                | )          | 14.21                                                 |       | (52,106 | ) | 12.09 |   |
| Outstanding  -Ending                                          |       | 3,949,627                                              |       | $                                                     | 10.39      |   | 4,043,656 |   | $ | 10.29 |   |
|                                                          |       |                                                   |       |                                                  |       |   |   |   |   |
| Weighted-average  Black-Scholes fair value of options granted |       |                                                   |       | $                                                     | 5.95       |   |   |   | $ | 3.86 |   |

 
|                                                               | ** ** | **26 weeks - August 4, 2007** | ** ** | **26 weeks - July 29, 2006** | ** ** |
|---------------------------------------------------------------|------------|--------------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                                                    | ** ** | **Number of  Shares Under  Option**          | ** ** | **Weighted-  Average  Exercise Price**           | ** ** | **Number of  Shares Under  Option** | ** ** | **Weighted-  Average  Exercise Price** | ** ** |
| Outstanding -  Beginning                                      |       | 3,945,475                                              |       | $                                                     | 10.16      |   | 3,680,804 |   | $ | 10.84 |   |
| Granted                                                       |       | 491,000                                                |       | 11.92                                                 |       | 533,867 |   | 6.81 |   |
| Exercised                                                     |       | (323,393                                               | )          | 9.07                                                  |       | — |   | — |   |
| Forfeited                                                     |       | (163,455                                               | )          | 11.66                                                 |       | (171,015 | ) | 11.24 |   |
| Outstanding  -Ending                                          |       | 3,949,627                                              |       | $                                                     | 10.39      |   | 4,043,656 |   | $ | 10.29 |   |
|                                                          |       |                                                   |       |                                                  |       |   |   |   |   |
| Weighted-average  Black-Scholes fair value of options granted |       |                                                   |       | $                                                     | 5.89       |   |   |   | $ | 3.34 |   |

 

**3. NewAccounting Pronouncement**

In June 2006, the Financial Accounting StandardsBoard (“FASB”) issued FASB Interpretation No. 48, *Accountingfor Uncertainty in Income Taxes* (“FIN 48”), an interpretation ofStatement of Financial Accounting Standards No. 109, *Accountingfor Income Taxes*.  FIN 48clarifies the accounting for uncertainty in income taxes by prescribing arecognition threshold for tax positions taken or expected to be taken in a taxreturn. The recognition threshold requires that we determine whether it is morelikely than not that a tax position will be sustained upon examination, andthen the position is measured at the largest amount of benefit that is greaterthan 50 percent likely of being realized upon ultimate settlement. Unrecognizedtax benefits are tax benefits claimed on our tax returns that do not meet theserecognition and measurement standards. FIN 48 was effective as of the beginningof the first quarter of fiscal 2007. As of August 4, 2007 and February 3, 2007,we believe that no reserves for uncertain income tax positions need to berecorded pursuant to FIN 48.  As aresult, and due to our full valuation allowance, we do not have any unrecognizedtax benefits. Thus, our adoption of FIN 48 did not have a material impact onour financial position or results of operations. We do not believe there willbe any material changes in our unrecognized tax positions over the next 12months.

We are subject to audit by the Internal RevenueService and states in which we operate, with respect to income taxes for theprior three years. As of February 3, 2007, we have federal and state netoperating loss carryforwards of approximately $54.5 million expiring between2016 and 2026.

In September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements* (“SFAS No. 157”). SFAS No. 157defines fair value, establishes a framework for measuring fair value ingenerally accepted accounting principles and expands disclosures about fairvalue measurements. SFAS No. 157 applies to other accounting pronouncementsthat require or permit fair value measurements, as the FASB previouslyconcluded in those accounting pronouncements that fair value is the relevantmeasurement attribute. Accordingly, SFAS No. 157 does not require any new fairvalue measurements. SFAS No. 157 is effective for fiscal years beginning afterNovember 15, 2007. We plan to adopt SFAS No. 157 beginning in the first quarterof fiscal 2008. We are currently evaluating the impact, if any, the adoption ofSFAS No. 157 will have on our financial position and results of operations.

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In February 2007, the FASB issued SFAS No. 159, *The Fair Value Option for Financial Assets and Liabilities – Includingan Amendment of FASB Statement No. 115* (“SFAS No. 159”). SFAS No.159 permits us to choose to measure certain financial assets and liabilities atfair value that are not currently required to be measured at fair value (the “FairValue Option”). Election of the Fair Value Option is made on aninstrument-by-instrument basis and is irrevocable. At the adoption date,unrealized gains and losses on financial assets and liabilities for which theFair Value Option has been elected would be reported as a cumulative adjustmentto beginning retained earnings. If we elect the Fair Value Option for certainfinancial assets and liabilities, we will report unrealized gains and lossesdue to changes in their fair value in earnings at each subsequent reportingdate. SFAS No. 159 is effective for our 2008 fiscal year. We are currentlyevaluating the potential impact of adopting SFAS No. 159 on our financialposition and results of operations.

**4. Capital Stock**

The authorized capital stock of our company consists of 100,000,000 sharesof common stock, par value $.01 per share, and 5,000,000 shares of preferredstock, par value $.01 per share. As of August 4, 2007, there were 20,361,947shares of common stock and no shares of preferred stock outstanding.

**5.Credit Facility and Secured Borrowings**

***Credit facility*** - Our credit facility provides us with thecapital to fund the operations and growth of our business.  On August 15, 2007, pursuant to an amendedand restated agreement, we agreed with Bank of America, N.A., as agent, and thelenders named therein, to increase our revolving credit facility to $345million from $275 million, with an option to increase the revolving facility byanother $55 million subject to certain terms and conditions. The additionaloutstanding term loan commitment remains at $20 million. The amended facilityalso extends the maturity date for the revolving and term loan, by three years,to June 30, 2012. We will continue to utilize the proceeds of the creditfacility for working capital and general corporate purposes.

Outstanding borrowings under the credit facility,including letters of credit, were $258.8 million and $226.5 million as ofAugust 4, 2007 and July 29, 2006, respectively. Actual availability under the amended credit facility is limited tospecific advance rates on eligible inventory and accounts receivable.Typically, availability will be highest in the latter half of our fiscal yearas inventory levels and advance rates increase. Based on eligible inventory andaccounts receivable balances as of August 4, 2007 and July 29, 2006, ouravailable borrowing capacity under the credit facility, after subtractingletters of credit, was $32.8 million and $16.7 million, respectively.

Thecredit facility specifies testing of the EBITDA covenant is required only whenour availability is less than 10% of the lesser of (a) the revolving creditfacility maximum on any given day or (b) the borrowing base, as defined andadjusted for certain reserves. It also requires quarterly testing of theoperating cash flow covenant. We were in compliance with all covenants as ofAugust 4, 2007 and February 3, 2007.

***Secured Borrowings*** – During our second quarter of fiscal 2007, we entered into anagreement with Bank of America that allowed us to finance capital expendituresof certain of our new stores under long-term, secured financing arrangements.In June 2007, in exchange for $7.3 million, we issued a promissory notecarrying a fixed interest rate of 8.7% and a five year repayment term. Monthlypayments of principal and interest are made under this note, which is securedby certain property and equipment of ten new stores we opened in fiscal 2005and fiscal 2006.

**6.Earnings Per Share**

Basic and diluted income orloss per share is based upon the weighted average number of sharesoutstanding.  Diluted loss per share forthe 13 and 26 weeks ended August 4, 2007 and the 13 and 26 weeks ended July 29,2006 excludes potentially dilutive stock options from the calculation ofweighted average shares outstanding because including them would have ananti-dilutive effect on loss per share.

As of August 4, 2007 andJuly 29, 2006, there were a total of 3,949,627 and 4,043,656 options topurchase common stock outstanding, respectively.

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**7.Selected Balance Sheet Information (in thousands)**
|                                                      | ** ** | **August 4,  2007** | ** ** | **February 3,  2007** | ** ** |
|------------------------------------------------------|------------|--------------------------|------------|----------------------------|------------|
| *Accrued  and other current liabilities consist of:* | ** ** | ** **               | ** ** | ** **                 | ** ** |
| Gift cards and gift  certificate liabilities         |       | $                        | 18,563     |                       | $          | 25,616 |   |
| Payroll and  related fringe benefits                 |       | 7,727                    |       | 6,456                      |       |
| Sales, property  and use taxes                       |       | 7,410                    |       | 5,530                      |       |
| Lease related  costs                                 |       | 1,364                    |       | 1,325                      |       |
| Insurance  reserves and liabilities                  |       | 1,633                    |       | 2,014                      |       |
| Interest                                             |       | 678                      |       | 391                        |       |
| Due-to-related  parties                              |       | 15                       |       | 22                         |       |
| Other accruals  and current liabilities              |       | 10,391                   |       | 6,678                      |       |
| **Accrued  and other current liabilities**           |       | $                        | 47,781     |                       | $          | 48,032 |   |

 
|                                | ** ** | **August 4,  2007** | ** ** | **February 3,  2007** | ** ** |
|--------------------------------|------------|--------------------------|------------|----------------------------|------------|
| *Long  term debt consists of:* | ** ** | ** **               | ** ** | ** **                 | ** ** |
| Capitalized  lease obligations |       | $                        | 11,523     |                       | $          | 11,428 |   |
| Term notes                     |       | 10,648                   |       | 4,993                      |       |
| **Long  term debt**            |       | $                        | 22,171     |                       | $          | 16,421 |   |

 
|                                            | ** ** | **August 4,  2007** | ** ** | **February 3,  2007** | ** ** |
|--------------------------------------------|------------|--------------------------|------------|----------------------------|------------|
| *Other  long term liabilities consist of:* | ** ** | ** **               | ** ** | ** **                 | ** ** |
| Deferred rent                              |       | $                        | 25,601     |                       | $          | 25,310 |   |
| Insurance  reserves and other liabilities  |       | 1,570                    |       | 2,033                      |       |
| **Other  long term liabilities**           |       | $                        | 27,171     |                       | $          | 27,343 |   |

 

**8. Supplemental Cash FlowInformation**

During the 26 weeks endedAugust 4, 2007, we acquired equipment totaling $1.6 million that was financedthrough capital leases. There were no new capital leases during the 26 weeksended July 29, 2006.

Purchases of property andequipment in the statement of cash flows for the 26 weeks ended August 4, 2007also excludes $1.2 million in non-cash accruals for property and equipmentplaced in service that did not yet require the use of cash. Such accruals werenot material for the 26 weeks ended July 29, 2006.

**9. Contingencies**

***Trademark Litigation—***On July 2, 2004, we filed a complaint in theU.S. District Court for the District of Minnesota seeking declaratory reliefthat the contingent trademark licensing provision of a noncompetition agreementdated May 16, 1996, made between our predecessor and Cabela’s Incorporated, isinvalid and unenforceable. Although the noncompetition provisions of thenoncompetition agreement expired in June 2003, Cabela’s contends that acontingent trademark licensing provision of the noncompetition agreement nowrequires us to grant Cabela’s a license that would preclude our use of certainof our trademarks for direct marketing purposes.

On July 10, 2007, the U.S. District Court issued anorder granting our motion for summary judgment, ruling that the contingenttrademark licensing provision was unenforceable.  The order provides, in part, that we are freeto use our trademarks in all respects including direct marketing toconsumers.  Cabela’s has appealed theruling to the U.S. Court of Appeals, 8th Circuit.

We are not able to predict the ultimate outcome ofthis litigation, but it could be costly and disruptive. The total costs may notbe reasonably estimated at this time.  Ifthe July 10, 2007 order is reversed, subsequent proceedings might

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impact the manner in which we market our products in certaindistribution channels in the future. Such an adverse result is not expected tohave an affect on our marketing of products through our retail stores. Norwould an unfavorable result preclude us from engaging in direct marketingactivities using trademarks not in dispute. A favorable result would confirmour right to use the subject trademarks in all direct marketing activities.

***Other Legal Claims—***Various claims and lawsuits arising in thenormal course of business may be pending against us from time to time. Thesubject matter of these proceedings typically relate to commercial disputes andemployment issues. As of the date of this report, we are not a party to anylegal proceedings that are expected, individually or in the aggregate, to havea material adverse effect on our financial condition or results of operations.

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

**ForwardLooking Statements**

The following discussion may contain forward-lookingstatements regarding us, our business prospects and our results of operationsthat are subject to certain risks and uncertainties posed by many factors andevents that could cause our actual business, prospects and results ofoperations to differ materially from those that may be anticipated by suchforward-looking statements. Factors that could cause or contribute to suchdifferences include, but are not limited to, those described in Item 1A - “RiskFactors” in our annual report on Form 10-K for the fiscal year ended February3, 2007, as filed with the Securities and Exchange Commission.  Readers are cautioned not to place unduereliance on these forward-looking statements, which speak only as of the dateof this report. We undertake no obligation to revise any forward-lookingstatements in order to reflect events or circumstances that may subsequentlyarise. Readers are urged to carefully review and consider the variousdisclosures made by us in this report and in our other reports filed with theCommission that advise interested parties of the risks and factors that mayaffect our business.

The interim financials statements filed on this Form10-Q and the discussions contained herein should be read in conjunction withthe annual financial statements and notes included in our Form 10-K, as filedwith the Securities and Exchange Commission, which includes audited financialstatements for our three fiscal years ended February 3, 2007.

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**Overview**

Gander Mountain Company operates the nation’slargest retail network of stores specializing in hunting, fishing, camping, marineand outdoor lifestyle products and services. As of August 4, 2007, we expandedour store base to 108 conveniently located Gander Mountain outdoor lifestylestores, providing approximately 5.7 million square feet of retail space in 22states: Alabama, Arkansas, Colorado, Florida, Illinois, Indiana, Iowa, Kansas,Kentucky, Maryland, Michigan, Minnesota, New York, North Carolina, NorthDakota, Ohio, Pennsylvania, Tennessee, Texas, Virginia, West Virginia andWisconsin. We anticipate opening 13 new stores in fiscal 2007, including threerelocations.  Four new stores were openedin the first half of fiscal 2007, including one relocated store.

Our core strategy and focus is to provide our targetcustomers with a unique combination of a broad assortment of outdoor equipment,accessories, related technical apparel and footwear; expert services;convenient locations; and value pricing. Our stores feature an extensiveselection of leading national and regional brands as well as our company’sowned brands. We tailor our merchandise assortments to take advantage of ourcustomers’ seasonal and regional or local preferences. We seek to combine thisbroad product offering with superior customer service based on our storeassociates’ extensive product knowledge and outdoor-related experience.

Since its origin in 1960, our brand name has had aheritage of strong appeal and relevance to consumers who participate in outdoorsports and recreation activities, based on our “We Live Outdoors” culture andtheme. From 1960 to 1996, our predecessor operated a nationwide catalogbusiness that, by 1996, included 17 retail stores. In 1996 and 1997, HolidayCompanies, which at the time owned and operated a group of retail sportinggoods stores, acquired these Gander Mountain retail stores, formed our companyand began to build a new outdoor lifestyle business.

In March 2003, we began transforming our marketposition from a traditional specialty store to a large-format, category-focusedstore by opening new stores in a large format and increasing the selling spacewithin our original, small-format stores. Prior to March 2003, our typicalstore was approximately 31,000 square feet. Our large-format stores range fromapproximately 50,000 to 100,000 square feet, with our current focus primarilyupon stores of 60,000 to 65,000 square feet with an outside selling area. Ourlarge-format stores generally are located with convenient access to a majorhighway and have a warehouse-style shopping environment characterized byconcrete floors, open-bar joist ceilings, high-density racking and wide aisles.To further build upon our brand’s reputation for high quality and exceptionalvalue, in certain markets we are outfitting stores with additional featuressuch as brick and stone accents, log-wrapped columns, and improved branding,fixture, flooring and signage elements.

The larger format enables us to offer more productsand services to our customers. Most of our large-format stores offerall-terrain vehicles (ATVs). Our large-format stores offer unique features andspecialized services, including a full-service gunsmith shop, a full-servicearchery pro shop, archery target lanes, and a power shop performing repairs forATVs, boats and other engines. Some of the large-format stores also include abait shop that opens early for the convenience of our customers. Nearly all ofour stores have a Gander Mountain Lodge, which is an in-store meeting roomavailable for public use, where we provide hunter safety classes,outdoor-skills seminars and other community-focused activities. Many of ourlarge-format stores utilize adjacent outside selling areas to displayadditional offerings of larger items such as ATVs, boats, kayaks, trailers andcanoes. The outside selling areas increase the efficiency of our stores andoffer greater visibility for the products displayed. As of August 4, 2007, 59of our 108 stores were in our large format.

In January 2007, we and Tracker Marine Group, adivision of Bass Pro Shops, announced that the popular Tracker Marine Groupboat brands will be featured in our stores. Our roll-out of this expanded boatprogram, which also features the Crestliner, Mercury and Yamaha brands, beganmid-quarter of our first quarter of 2007. Brand offerings are tailored in each location based on market and storedynamics and customer preferences. As of August 4, 2007, Tracker brand boatsare sold in 34 of our large-format stores and we expect to include this productoffering in most large format stores that we open. At the end of fiscal 2007,we expect to have this product offering in approximately 50 stores. In 2006,approximately 10 stores carried an assortment of fishing and recreationalboats.

We utilize several strategic and operatinginitiatives aimed at improving our merchandise offerings, enhancing profitabilityand expanding the number and geographic diversity of our stores. We measureperformance using such key operating statistics as comparable store sales,sales per square foot, gross margin percentage and store operating expenses,with a focus on labor, as a percentage of sales.

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We also measure and evaluate investments in ourretail locations, including inventory and property and equipment. Inventoryperformance is primarily measured by inventory per square foot and by inventoryturns, or the number of times store inventory turns over in a given period, andamounts of owned inventory at various times based on payment terms from ourvendors. The most significant investments in property and equipment are made atthe time a store is opened by us.

We believe that the overall growth of our businesswill allow us to generally maintain or increase our product gross margins.Increased merchandise volumes should enable us to improve our purchasingleverage and achieve greater support throughout the supply chain. The mix ofmerchandise in our total sales also influences our product gross margins. As wecontinue sales and store growth, a number of other factors may impact,positively or negatively, our product gross margin percentage, including:

·                  the introduction of new product categorieswith varying gross margin percentage characteristics,

·                  changes in the merchandise mix at our currentlocations,

·                  differences in merchandise mix by geographiclocation,

·                  price competition,

·                  clearance activities in connection withseasonal inventory management,

·                  closeout sales in connection with storerelocations and consolidations,

·                  sourcing of products from locations outsidethe United States,

·                  vendor programs, and

·                  supply chain enhancements.

In addition, our gross margin is impacted by storeoccupancy and distribution costs. We monitor these costs in absolute dollarsand as a percentage of sales.

The most significant store operating expenses arelabor and related employee benefits and advertising. Our employee benefitsinclude health insurance, the cost of which continues to increase faster thanthe general rate of inflation. We continually monitor this cost and reviewstrategies to effectively control increases, but we are subject to the overalltrend of increases in health care costs. Advertising costs are monitored as apercentage of sales. These costs are largely variable, which allows us toactively manage them to facilitate achieving our sales, gross margin percentageand store operating contribution objectives.

Store operating contribution, which is calculated bydeducting a store’s operating expenses from its gross margin, is used toevaluate overall performance on an individual store basis.

General and administrative expenses are monitoredand controlled as a percentage of sales. We have made significant investmentsin infrastructure, including our information systems, distribution capabilitiesand personnel. Our current infrastructure facilitates our planned opening ofstores. We expect these expenses to decrease as a percentage of sales overtime.

Pre-openingexpenses will continue to be related to store openings, including relocations.These expenses will fluctuate based on the number and timing of new storeopenings. Beginning in the second quarter of fiscal 2007, pre-opening expensesalso include the costs incurred in preparing to launch a direct channeloffering to customers through an e-commerce web site.

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Inventory turns are based on cost of sales andaverage inventory for the applicable period. We recognize that our inventoryturns may be lower than those of other retailers, which we believe is due, inpart, to the categories of merchandise we carry, including firearms, and thelarge quantities of merchandise we use in our in-store displays. We believe we havethe opportunity to enhance our supply chain to improve our inventory turns.Additionally, in merchandise categories that experience slower inventory turns,we continue to work with vendors to increase our trade credit terms to reduceour investment in owned inventory. We cannot assure you that we will be able toimprove our inventory turns or inventory investment.

Identification of appropriate new store sites isessential to our growth strategy. We believe our focus on our larger store sizeand our ability to utilize either recycled, or second-use, facilities orbuild-to-suit locations provides us with increased opportunities to findoptimal real estate locations on attractive terms. We evaluate and invest innew stores based on site-specific projected returns on investment.

**Critical Accounting Policies and Use of Estimates**

Our financial statements are prepared in accordancewith U.S. generally accepted accounting principles.  In connection with the preparation of thefinancial statements, we are required to make assumptions, make estimates andapply judgments that affect the reported amounts of assets, liabilities,revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historicalexperience, current trends and other factors that we believe to be relevant atthe time the financial statements are prepared. On a regular basis, we reviewthe accounting policies, assumptions, estimates and judgments to ensure thatour financial statements are presented fairly and in accordance with U.S.generally accepted accounting principles. However, because future events andtheir effects cannot be determined with certainty, actual results could differfrom our assumptions and estimates, and such differences could be material.

Our critical accounting policies and use ofestimates are discussed and should be read in conjunction with the annualfinancial statements and notes included in our Form 10-K, as filed with theSecurities and Exchange Commission, which includes audited financial statementsfor our three fiscal years ended February 3, 2007.

**Results of Operations**

The following table represents our unauditedstatements of operations reflected as a percentage of sales:
| ** **                          | ** ** | **13 Weeks Ended** | ** ** | **26 Weeks Ended** | ** ** |
|-------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                          | ** ** | **August 4,**           | ** ** | **July 29,**            | ** ** | **August 4,** | ** ** | **July 29,** | ** ** |
| ** **                          | ** ** | **2007**                     | ** ** | **2006**                     | ** ** | **2007** | ** ** | **2006** | ** ** |
| Sales                               |       | 100.0                        | %          | 100.0                        | %          | 100.0 | % | 100.0 | % |
| Cost of goods  sold                 |       | 76.2                         | %          | 75.8                         | %          | 78.2 | % | 79.0 | % |
| Gross profit                        |       | 23.8                         | %          | 24.2                         | %          | 21.8 | % | 21.0 | % |
|                                |       |                         |       |                         |       |   |   |   |   |
| Operating  expenses:                |       |                         |       |                         |       |   |   |   |   |
| Store operating expenses            |       | 20.2                         | %          | 20.0                         | %          | 21.5 | % | 21.4 | % |
| General and administrative expenses |       | 5.4                          | %          | 5.3                          | %          | 5.9 | % | 5.6 | % |
| Pre-opening expenses                |       | 0.6                          | %          | 0.4                          | %          | 0.5 | % | 0.4 | % |
| Loss from  operations               |       | (2.4                         | )%         | (1.5                         | )%         | (6.1 | )% | (6.4 | )% |
| Interest  expense, net              |       | 2.1                          | %          | 2.6                          | %          | 2.2 | % | 2.6 | % |
| Loss before  income taxes           |       | (4.5                         | )%         | (4.1                         | )%         | (8.3 | )% | (9.0 | )% |
| Income tax  provision               |       | 0.0                          | %          | 0.0                          | %          | 0.0 | % | 0.0 | % |
| Net loss                            |       | (4.5                         | )%         | (4.1                         | )%         | (8.3 | )% | (9.0 | )% |

 

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 A store isincluded in the comparable store base in its fifteenth full month ofoperations.  A relocated store returns tothe comparable store base in its fifteenth full month after relocation.Non-comparable store sales include sales from our stores before they have beguntheir fifteenth month of operation.

Costof goods sold includes the cost of merchandise, freight, distribution, inventoryshrinkage and store occupancy costs. Store occupancy costs include rent, realestate taxes and common area maintenance charges. Initial product marginrepresents sales less the supplier’s cost of merchandise only.

Storeoperating expenses include store associate payroll, taxes and fringe benefits,advertising, maintenance, utilities, depreciation, insurance, bank and creditcard charges and other store level expenses.

Generaland administrative expenses include all expenses associated with operating ourcorporate headquarters.

Pre-openingexpenses consist primarily of payroll, rent, recruiting, advertising and othercosts incurred prior to a new store opening. Beginning in the second quarter offiscal 2007, pre-opening expenses also include the costs incurred in preparingto launch a direct channel offering to customers through an e-commerce website.

Thefollowing table represents our sales by major product category stated as apercentage:  

***Salesby Product Category***
|                                               | ** ** | **13 Weeks Ended** | ** ** |
|-----------------------------------------------|------------|------------------------------|------------|
| ** **                                    | ** ** | **August 4,**           | ** ** | **July 29,** | ** ** |
| ** **                                    | ** ** | **2007**                     | ** ** | **2006** | ** ** |
| Hunting and  Firearms                         |       | 31.8                         | %          | 32.1 | % |
| Fishing and  Marine                           |       | 26.2                         | %          | 27.4 | % |
| Camping,  Paddlesports and Backyard Equipment |       | 10.2                         | %          | 12.0 | % |
| Apparel and  Footwear                         |       | 18.3                         | %          | 20.0 | % |
| Powersports                                   |       | 11.0                         | %          | 5.5 | % |
| Other                                         |       | 2.5                          | %          | 3.0 | % |
| TOTAL                                         |       | 100.0                        | %          | 100.0 | % |

 

Powersportsincludes sales of boats, ATVs, accessories and related servicing revenues.  The Other category includes sales of food andcandy, gifts and home décor.

***Thirteen Weeks Ended August 4, 2007 compared to Thirteen Weeks EndedJuly 29, 2006***

*Sales.* Sales increased by $34.0 million, or 18.6%,to $216.5 million in the second quarter of fiscal 2007 from $182.5 million inthe second quarter of fiscal 2006. This increase primarily resulted from salesof $28.4 million from new stores not yet included in the comparable store salesbase. This increase was supplemented by a comparable store sales increase of$7.2 million, and was partially offset by a $1.6 million sales decrease fromrelocated or consolidated stores and changes in other revenues. Comparablestore sales increased 4.2% compared to a decrease of 6.7% in the second quarterof fiscal 2006. We opened three new stores during the second quarter of fiscal2007 compared to one new store during the second quarter of fiscal 2006. Totalsquare footage as of August 4, 2007 increased 12.0% to 5.7 million square feet,as compared to July 29, 2006.

The comparable store salesincrease was impacted by the strong performance of our southern stores, but wasoffset by softer sales in our northern stores. Overall sales performance wasenhanced by the increase in powersports sales generated by the rollout of ourboat offering across 34 stores. Sales performance in apparel was weaker thanexpected and we continue to make changes to our strategy, initiatives andmerchandising leadership in this area. Firearms/ammunition continued itspositive trend with an 11% increase in comparable sales.

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*Gross Profit.*Gross profit increased by $7.5 million, or 16.9%, to $51.5 million in thesecond quarter of fiscal 2007 from $44.1 million in the second quarter offiscal 2006. As a percentage of sales, gross profit decreased 35 basis pointsto 23.8% in the second quarter of fiscal 2007 from 24.2% in the second quarterof fiscal 2006.  The primary factorsaffecting gross profit in the current quarter were an initial product marginincrease of 60 basis points, offset by a 137 basis point decrease attributableto the shift in sales mix resulting from increased lower-margin powersportssales and less higher-margin apparel sales. The net-initial product margin ratedecrease of 77 basis points was partially offset by sales leverage in occupancycosts.

*Store Operating Expenses.*  Storeoperating expenses increased by $7.3 million, or 19.9%, to $43.7 million in thesecond quarter of fiscal 2007 from $36.5 million in the second quarter offiscal 2006. As a percentage of sales, store operating expenses increased 21basis points to 20.2% in the second quarter of fiscal 2007 from 20.0% in thesecond quarter of fiscal 2006. The increase was primarily attributable to ournew incentive compensation structure. Advertising and marketing expenses wereapproximately the same in the comparable quarters as a percentage of sales.

*General and AdministrativeExpenses.*  General and administrative expenses increasedby $2.1 million, or 21.8%, to $11.7 million in the second quarter of fiscal2007 from $9.6 million in the second quarter of fiscal 2006. As a percentage ofsales, general and administrative expenses increased 14 basis points to 5.4% inthe second quarter of fiscal 2007 from 5.3% in the second quarter of fiscal2006. The increase as a percentage of sales was primarily due to our newincentive compensation structure.

*Pre-opening Expenses.* Pre-opening expenses increased $0.5 million, or 74.3%, to $1.2 millionin the second quarter of fiscal 2007 from $0.7 million in the second quarter offiscal 2006. We opened three new stores in the second quarter of fiscal 2007compared to one new store in the second quarter of fiscal 2006. Pre-openingexpenses in fiscal 2007 also include approximately $0.3 million of costsrelated to the early-stage development of a direct channel offering tocustomers through an e-commerce web site.

*Interest Expense, net.* Interest expense decreased $0.3 million to $4.5 million in the secondquarter of fiscal 2007 from $4.8 million in the second quarter of fiscal 2006.Average outstanding borrowings for the current quarter increased approximately3% as compared to the  averageoutstanding borrowings for the second quarter of fiscal 2006. The increase was dueto increased cash used in operations primarily to acquire additional inventoryoffset by a reduction in debt resulting from the application of proceeds fromthe issuance of $50 million of common stock in December 2006. Interest expensewas further reduced by an approximately 70 basis points decrease in interestrates primarily as a result of our February 28, 2007 amendment to our credit facility.

*Income Tax Provision.* We did not record an income tax provisionfor the second quarters of fiscal 2007 or fiscal 2006 due to the uncertainty ofthe realization of the net operating loss carry forwards. We have determinedthe realization of the tax benefit related to our net deferred tax asset isuncertain at this time and a valuation allowance was recorded for the entirebalance of our net deferred tax asset.

*Net Loss.*As a result of the factors discussed above,the net loss of $9.7 million for the second quarter of fiscal 2007 representedan increase of $2.1 million from the net loss of $7.6 million for the secondquarter of fiscal 2006.

***Twenty-Six Weeks Ended August 4, 2007 compared to Twenty-Six WeeksEnded July 29, 2006***

*Sales.*  Salesincreased by $54.2 million, or 16.0%, to $392.3 million in the first half offiscal 2007 from $338.1 million in the first half of fiscal 2006. This increaseresulted primarily from sales of $48.3 million from new stores not yet includedin the comparable store sales base. This increase was supplemented by acomparable store sales increase of $8.8 million, and was partially offset by a$2.9 million sales decrease from relocated or consolidated stores and changesin other revenues. Comparable store sales increased 2.7% compared to a decreaseof 8.4% in the first half of fiscal 2006. We opened four new stores during thefirst half of fiscal 2007, including one relocation, compared to three newstores during the first half of fiscal 2006, including one relocation.

The comparable store salesincrease was impacted by the strong performance of our southern stores, but wasoffset by softer sales in our northern stores. Overall sales performance wasenhanced by the increase in powersports sales generated by the rollout of ourboat offering across 34 stores, and by continued strength in firearms/ammunitionand footwear. Sales performance in apparel was less than expected and wecontinue to make changes to our strategy, initiatives and merchandisingleadership in this area. The sales softness in the northern stores was alsoimpacted by reduced clearance activity in the first quarter of fiscal 2007.

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*Gross Profit.*Gross profit increased by $14.3 million, or 20.2%, to $85.4 million in thefirst half of fiscal 2007 from $71.1 million in the first half of fiscal 2006.As a percentage of sales, gross profit increased 75 basis points to 21.8% inthe first half of fiscal 2007 from 21.0% in the first half of fiscal 2006.

Theprimary factors affecting gross profit in the current half were an initialproduct margin increase of  112 basispoints as a result of continued benefits from buying leverage and increasingscale, the positive impact of our Everyday-Low-Price strategy on our pricingstructure, lower clearance activities and regional pricing adjustments. Thesewere partially offset by an 88 basis point decrease attributable to the shiftin sales mix resulting from increased lower-margin powersports sales and lesshigher-margin apparel sales. The net-initial product margin was 24 basis pointshigher in the first half of fiscal 2007 than the first half of fiscal 2006. Thenet-initial product margin rate increase of 24 basis points was also supplementedwith sales leverage in occupancy costs.

*Store Operating Expenses.*  Storeoperating expenses increased by $12.0 million, or 16.5%, to $84.3 million inthe first half of fiscal 2007 from $72.3 million in the first half of fiscal2006. As a percentage of sales, store operating expenses increased 9 basispoints to 21.5% in the first half of fiscal 2007 from 21.4% in the first halfof fiscal 2006. Improved store labor productivity and favorable trends ininsurance claims for which we are self-insured, resulted in leverage as apercentage of sales, but were offset by early start-up costs (first quarter)related to the roll-out of the Tracker Marine boat program and a new incentivecompensation structure (second quarter). Advertising and marketing expense as apercentage of sales were approximately the same in the comparable 26 weekperiods.

*General and AdministrativeExpenses.*  General and administrative expenses increasedby $4.2 million, or 22.1%, to $23.2 million in the first half of fiscal 2007from $19.0 million in the first half of fiscal 2006. As a percentage of sales,general and administrative expenses increased 29 basis points to 5.9% in thefirst half of fiscal 2007 from 5.6% in the first half of fiscal 2006. Theincrease as a percentage of sales was primarily due to the new incentivecompensation structure as well as increased investment in systemsinfrastructure, logistics consulting, travel and severance costs.

*Pre-opening Expenses.* Pre-opening expenses increased $0.5 million, or 33.3%, to $2.0 millionin the first half of fiscal 2007 from $1.5 million in the first half of fiscal2006. We opened four new stores in the first half of fiscal 2007 and we openedthree new stores in the first half of fiscal 2006. Pre-opening expenses in thefirst half of fiscal 2007 also included approximately $0.3 million of costsrelated to the early-stage development of a direct channel offering tocustomers through an e-commerce web site.

*Interest Expense, net.* Interest expense decreased $0.3 million, or 3.7%, to $8.5 million in thefirst half of fiscal 2007 from $8.8 million in the first half of fiscal 2006.Average outstanding borrowings during the first half of fiscal 2007 wereapproximately the same, increasing less than 1%, as compared to the first halfof fiscal 2006, due primarily to the reduction of debt from the issuance of $50million of common stock in December 2006. Interest expense was further reducedby an approximately 35 basis points decrease in average interest rates primarilyas a result of our February 28, 2007 amendment to our credit facility.

*Income Tax Provision.* We did not record an income tax provisionfor the first half of fiscal 2007 or fiscal 2006 due to the uncertainty of therealization of the net operating loss carry forwards. We have determined therealization of the tax benefit related to our net deferred tax asset isuncertain at this time and a valuation allowance was recorded for the entirebalance of our net deferred tax asset.

*Net Loss.*As a result of the factors discussed above,the net loss of $32.5 million for the first half of fiscal 2007 represented anincrease of $2.0 million from the net loss of $30.5 million for the first halfof fiscal 2006.

**Liquidity and Capital Resources**

Our primary capital requirements are for inventory, propertyand equipment and pre-opening expenses to support our new store growth plans,and, to the extent of the highly seasonal nature of our business, operatinglosses.

*Operating Activities.*  Netcash used in operating activities for the first half of fiscal 2007 increasedby $36.1 million to $67.8 million, as compared to $31.7 million for the firsthalf of fiscal 2006. This was primarily the result of an additional $43.3million of inventory growth in the first half of fiscal 2007 as compared to thefirst half of fiscal 2006. Additional stores, increased inventory levels inpowersports resulting from the roll-out of the Tracker Marine boat program,increased ATV inventory as a result of more large-format stores that carry ATVsand our tactical efforts to merchandise certain seasonal inventory in ourstores earlier, all contributed to the increased inventories. Funding fromincreased levels of accounts payable and accrued

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expenses provided $10.8 million more in the first half of fiscal 2007versus the first half of fiscal 2006. Large powersports purchases are usually executedunder vendor payment terms of usually 90 or 180 days as compared to the company’saverage of approximately 40 days.

*Investing Activities*.  Netcash used in investing activities was $17.5 million in the first half offiscal 2007 and $15.1 million in the first half of fiscal 2006. We usedcash primarily for equipment to open new stores, for information technologyequipment at our corporate offices and to upgrade existing stores. The increasein net cash used of $2.3 million was primarily due to proceeds from thesale of assets in fiscal 2006, which we did not experience in fiscal 2007.During the 26 weeks ended August 4, 2007 and July 29, 2006, weacquired equipment totaling approximately $1.6 million and $0,respectively, that was financed through capital leases. Purchases of propertyand equipment in the statement of cash flows for the 26 weeks ended August 4,2007 also excludes approximately $1.2 million in non-cash accruals forproperty and equipment placed in service that did not yet require the use of cash.

*Financing Activities*. * *Net cash provided by financingactivities for the first half of fiscal 2007 increased by $38.8 million to$85.4 million, as compared to $46.5 million in the first half of fiscal 2006.Net borrowings under our credit facility were $35.1 million of this increaseand these borrowings were due to the increase in cash used in operations of$36.1 million and $2.3 million of additional cash used for investingactivities. Our financing activities were utilized to fund our continued storeand business expansion, including inventory, property and equipment, and tofund our seasonal operating losses. Other funding sources for these cash needsduring the first half of fiscal 2007 included proceeds of $2.9 million from theexercise of stock options.

During our second quarter of fiscal 2007, we enteredinto an agreement with Bank of America that allowed us to finance capitalexpenditures of certain of our new stores under a long-term, secured financingarrangement. In June 2007, in exchange for $7.3 million, we issued apromissory note carrying a fixed interest rate of 8.7% and a five yearrepayment term. Monthly payments of principal and interest are made under thisnote which is secured by certain property and equipment of ten new storesopened in fiscal 2006 and fiscal 2005. Additionally, in September 2007, wecompleted another similar financing for $5.5 million.

*Credit Facility.*Our credit facility provides us with thecapital to fund the operations and growth of our business.  On August 15, 2007, pursuant to an amendedand restated agreement, we agreed with Bank of America, N.A., as agent, and thelenders named therein, to increase our revolving credit facility to $345million from $275 million, with an option to increase the revolving facility byanother $55 million subject to certain terms and conditions. The additionaloutstanding term loan commitment remains at $20 million. The amended facilitymatures June 30, 2012. We plan to continue to utilize the proceeds of thecredit facility for working capital and general corporate purposes

Outstanding borrowings under the credit facility,including letters of credit, were $258.8 million and $226.5 million as ofAugust 4, 2007 and July 29, 2006, respectively. Actual availability under the amended credit facility is limited tospecific advance rates on eligible inventory and accounts receivable.Typically, availability will be highest in the latter half of our fiscal yearas inventory levels and advance rates increase. Based on eligible inventory andaccounts receivable balances as of August 4, 2007 and July 29, 2006, ouravailable borrowing capacity under the credit facility, after subtractingletters of credit, was $32.8 million and $16.7 million, respectively.Available borrowing capacity as of September 14, 2007 was $55.2 million.

Thecredit facility specifies testing of the EBITDA covenant is required only whenour availability is less than 10% of the lesser of (a) the revolving creditfacility maximum on any given day or (b) the borrowing base, as defined andadjusted for certain reserves. It also requires quarterly testing of theoperating cash flow covenant. We were in compliance with all covenants as ofAugust 4, 2007 and February 3, 2007.

*Income Taxes.*Due to the uncertainty of the realization ofnet operating loss carry forwards, we have determined the realization of thetax benefit related to our net deferred tax asset is uncertain at this time anda valuation allowance was recorded for the entire balance of our net deferredtax asset.

*Future Capital Requirements*. Our future capital requirements willprimarily depend on the number of new stores we open, the timing of thoseopenings within a given fiscal year and the need to fund seasonal operatinglosses. These requirements will include costs directly related to opening newstores and will also include costs necessary to ensure that our infrastructure,including technology and distribution capabilities, is able to support a largerstore base. We opened 8, 19 and 19 new stores in each of fiscal years 2006,2005 and 2004, respectively.

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Our cash used in investing activities was approximately $28 million infiscal 2006 and approximately $50 million in each fiscal 2005 and fiscal 2004.

In the first half of fiscal 2007, we opened four newstores, including one relocation, with capital expenditures of $17.5million.  We plan to open nine new storesin our upcoming third quarter of fiscal 2007 and will incur significant capitalexpenditures which will require capital in the range of $20 million to $25million.

We believe that we will be able to service ourexisting stores from our distribution center through fiscal 2008. We will needto begin to expand our distribution capabilities in the next one to two yearsas we continue to add new stores. We have undertaken a project to analyze ourfuture distribution requirements, develop a strategy to meet our needs, and aplan to implement that strategy. While we believe this project may requiresignificant capital in the next 24 months, no material commitments currentlyexist related to this project.  Thetiming and amount of any future commitment related to this project is dependenton a number of factors including new store growth plans, availability offinancing and our operating performance.

We incurred approximately $0.3 million of expense inthe second quarter of fiscal 2007 related to the early-stage development of adirect channel offering to customers through an e-commerce web site. While ourdirection and strategy as to how we enter the direct channel market is underdevelopment, we believe we will make expenditures in the next 12 months tofurther this important business objective. Depending on that strategy, we mayneed to fund approximately $2 million during the remainder of fiscal 2007,including capital expenditures.

In 2006, we began a significant effort to upgradeour merchandise and information systems that will provide enhanced efficienciesin buying, receiving, payables management and provide better and more detailedoperating information for decision making and continued supply chainimprovement. We expect to continue to evaluate, modify and update our informationsystems over the next several years.

We intend to satisfy our capital requirements in thenext 12 months with cash flows from operations, funds available under ourexpanded credit facility and various secured financing arrangements. However,if business conditions, business strategy or other factors change, we may needto seek additional debt or equity financing in the public or private markets.There is no assurance that financing will be available to us on acceptableterms. Dependent upon the number of future new store openings, we may needadditional long-term financing to grow our business in fiscal 2008 and beyond.

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**Contractual Obligations and Other Commitments**

Our material off-balancesheet arrangements are operating lease obligations for substantially all of ourretail stores, our distribution center and corporate office, as well as lettersof credit.  We excluded these items fromthe balance sheet in accordance with U.S. generally accepted accounting principles.As of August 4, 2007, the minimum operating lease payments due within one yearwere $64.5 million. As of August 4, 2007, total minimum operating leasepayments remaining over all of our operating leases were $786.7 million. Theseleases have an average remaining term of approximately 10 years and typicallyprovide us with several successive options to extend the term at our election. Theseobligation amounts include future minimum lease payments and exclude directoperating costs such as common area costs and real estate taxes.

Issued and outstandingletters of credit were $14.3 million and $10.7 million at August 4, 2007 andJuly 29, 2006, respectively, and were related primarily to importing ofmerchandise and supporting potential insurance program liabilities.

In the ordinary course of business, we enter intoarrangements with vendors to purchase merchandise in advance of expecteddelivery. Because most of these purchase orders do not contain any terminationpayments or other penalties if canceled, they are not included as outstanding contractualobligations. The merchandise purchases, for which we do have firm commitmentsoutstanding, in addition to letters of credit, were $13.9 million and $2.4million as of August 4, 2007 and July 29, 2006, respectively.

**QuarterlyResults of Operations and Seasonality**

Our quarterly operating results may fluctuate significantly because ofseveral factors, including the timing of new store openings and relatedexpenses, profitability of new stores, weather conditions and general economicconditions. Our business is also subject to seasonal fluctuation, withapproximately 62% to 65% of our sales activity normally occurring during thethird and fourth quarters of our fiscal year, which are primarily associatedwith the fall hunting seasons and the holiday season.  However, this factor cannot necessarily beused as an indicator of future results. Our customers’ demand for our productsand therefore our sales can be significantly impacted by unseasonable weatherconditions that affect outdoor activities and the demand for related appareland equipment. This seasonality also impacts our inventory levels, which tendto rise beginning approximately in April, reach a peak in November, and declineto lower levels after the December holiday season.

Our pre-opening expenses have and will continue tovary significantly from quarter to quarter, primarily due to the timing ofstore openings.  We typically incur mostpre-opening expenses for a new store during the three months preceding, and themonth of, its opening. In addition, our labor and operating costs for a newlyopened store can be greater during the first one to two months of operationthan what can be expected after that time, both in aggregate dollars and as apercentage of sales.  Accordingly, thevolume and timing of new store openings in any quarter has had and is expectedto continue to have a significant impact on quarterly pre-opening costs andstore labor and operating expenses.  Dueto these factors, results for any particular quarter may not be indicative ofresults to be expected for any other quarter or for a full fiscal year.

**New Accounting Pronouncements**

In June 2006, the Financial Accounting StandardsBoard issued FASB Interpretation No. 48, *Accounting for Uncertaintyin Income Taxes*, an interpretation of Statement of FinancialAccounting Standards No. 109, *Accounting for IncomeTaxes*.  FIN 48 clarifies theaccounting for uncertainty in income taxes by prescribing a recognitionthreshold for tax positions taken or expected to be taken in a tax return. Therecognition threshold requires that we determine whether it is more likely thannot that a tax position will be sustained upon examination, and then theposition is measured at the largest amount of benefit that is greater than 50%likely of being realized upon ultimate settlement. Unrecognized tax benefitsare tax benefits claimed on our tax returns that do not meet these recognitionand measurement standards. FIN 48 was effective as of the beginning of thefirst quarter of fiscal 2007. As of August 4, 2007 and February 4, 2007, webelieve that no reserves for uncertain income tax positions need to be recordedpursuant to FIN 48.  As a result, and dueto our full valuation allowance, we do not have any unrecognized tax benefits.Thus, our adoption of FIN 48 did not have a material impact on our financialposition or results of operations. We do not believe there will be any materialchanges in our unrecognized tax positions over the next 12 months.

We are subject to audit by the Internal Revenue Serviceand states in which we operate, with respect to income taxes for the priorthree years. As of February 3, 2007, we have federal and state netoperating loss carryforwards of approximately $54.5 million expiring between2016 and 2026.

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In September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements*. SFAS No. 157 defines fair value,establishes a framework for measuring fair value in generally acceptedaccounting principles and expands disclosures about fair value measurements.SFAS No. 157 applies to other accounting pronouncements that require or permitfair value measurements, as the FASB previously concluded in those accountingpronouncements that fair value is the relevant measurement attribute.Accordingly, SFAS No. 157 does not require any new fair value measurements.SFAS No. 157 is effective for fiscal years beginning after November 15, 2007.We plan to adopt SFAS No. 157 beginning in the first quarter of fiscal 2008. Weare currently evaluating the impact, if any, the adoption of SFAS No. 157 willhave on our financial position and results of operations.

In February 2007, the FASB issued SFAS No. 159, *The Fair Value Option for Financial Assets and Liabilities – Includingan Amendment of FASB Statement No. 115*. SFAS No. 159 permits us tochoose to measure certain financial assets and liabilities at fair value thatare not currently required to be measured at fair value. Election of the fairvalue option is made on an instrument-by-instrument basis and is irrevocable.At the adoption date, unrealized gains and losses on financial assets andliabilities for which the fair value option has been elected would be reportedas a cumulative adjustment to beginning retained earnings. If we elect the fairvalue option for certain financial assets and liabilities, we will reportunrealized gains and losses due to changes in their fair value in earnings ateach subsequent reporting date. SFAS No. 159 is effective for our 2008 fiscalyear. We are currently evaluating the potential impact of adopting SFAS No. 159on our financial position and results of operations.

**ITEM 3.  QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK**

We are exposed to market risk from changes in interest rates onborrowings under our credit facility. This floating rate indebtedness was$244.5 million at August 4, 2007 and averaged $233.6 million during the secondquarter of fiscal 2007. Our average interest rate for the second quarter offiscal 2007 under our credit facility was approximately 6.9% and wasapproximately 70 basis points lower than the same period last year dueprimarily to general interest rate upward movement offset by reductions weobtained in pricing relative to the revolving credit facility and term loan. Ifshort-term floating interest rates on our average variable rate debt for thesecond quarter of fiscal 2007 had increased by 100 basis points, our interestexpense would have increased by approximately $573,000, assuming comparableborrowing levels. These amounts are determined by considering the impact of thehypothetical interest rates on our average amount of floating rate indebtednessoutstanding and cash equivalents balances.

We have no derivative financial instruments or derivative commodityinstruments in our cash and cash equivalents. We have no international sales, however, we import certain items forsale in our stores.  Substantially all ofour purchases are denominated in U.S. dollars.

**ITEM 4.  CONTROLS AND PROCEDURES**

As of the end of the period covered by this report,we conducted an evaluation, under the supervision and with the participation ofthe principal executive officer and principal financial and accounting officer,of our disclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934).  Based on this evaluation, the principalexecutive officer and principal financial and accounting officer concluded thatour disclosure controls and procedures are effective to ensure that informationrequired to be disclosed by us in reports that we file or submit under theSecurities Exchange Act of 1934 is recorded, processed, summarized and reportedwithin the time periods specified in Securities and Exchange Commission rulesand forms. Our principal executive officer and principal financial andaccounting officer also concluded that our disclosure controls and proceduresare effective to ensure that information required to be disclosed in thereports we file or submit under the Securities Exchange Act of 1934 isaccumulated and communicated to our management, including our principalexecutive officer and principal financial and accounting officer, to allowtimely decisions regarding required disclosure. There was no change in our internal control over financial reportingidentified in connection with the evaluation required by Rule 13a-15(d) and15d-15(d) of the Securities Exchange Act of 1934 that occurred during theperiod covered by this report that has materially affected, or is reasonablylikely to materially affect, our internal control over financial reporting.

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#### **PART II. OTHER INFORMATION**

**ITEM 1.  LEGAL PROCEEDINGS**

***Trademark Litigation—***On July 2, 2004, we filed a complaint in theU.S. District Court for the District of Minnesota seeking declaratory reliefthat the contingent trademark licensing provision of a noncompetition agreementdated May 16, 1996, made between our predecessor and Cabela’s Incorporated, isinvalid and unenforceable. Although the noncompetition provisions of thenoncompetition agreement expired in June 2003, Cabela’s contends that acontingent trademark licensing provision of the noncompetition agreement nowrequires us to grant Cabela’s a license that would preclude our use of certainof our trademarks for direct marketing purposes.

On July 10, 2007, the U.S. District Court issued anorder granting our motion for summary judgment, ruling that the contingenttrademark licensing provision was unenforceable. The order provides, in part,that we are free to use our trademarks in all respects including direct marketingto consumers. Cabela’s has appealed the ruling to the U.S. Court of Appeals, 8th Circuit.

We are not able to predict the ultimate outcome ofthis litigation, but it could be costly and disruptive. The total costs may notbe reasonably estimated at this time.  Ifthe July 10, 2007 order is reversed, subsequent proceedings might impact themanner in which we market our products in certain distribution channels in thefuture. Such an adverse result is not expected to have an affect on ourmarketing of products through our retail stores. Nor would an unfavorableresult preclude us from engaging in direct marketing activities usingtrademarks not in dispute. A favorable result would confirm our right to usethe subject trademarks in all direct marketing activities.

***Other Legal Claims—***Various claims and lawsuits arising in thenormal course of business may be pending against us from time to time. Thesubject matter of these proceedings typically relate to commercial disputes andemployment issues. As of the date of this report, we are not a party to anylegal proceedings that are expected, individually or in the aggregate, to havea material adverse effect on our financial condition or results of operations.

**ITEM 1A.  RISK FACTORS**

Not applicable.

**ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES ANDUSE OF PROCEEDS**

Not applicable.

**ITEM 3.  DEFAULTS UPON SENIOR SECURITIES**

Notapplicable.

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**

On June 13, 2007, we held our annual meeting ofshareholders for the purpose of (a) electing seven directors to serve untiltheir successors are duly elected and (b) ratifying the appointment of Ernst& Young LLP as our independent registered public accounting firm for thefiscal year ending February 2, 2008.

Theshareholders present in person or by proxy cast the following numbers of votes(in whole shares) in connection with the election of directors: 
|                     | ** ** | ** ** | ** ** | **For**    | ** ** | **Withheld** | ** ** |
|---------------------|------------|------------|------------|------------|------------|--------------|------------|
| Mark R. Baker       |       |       |       | 17,734,232 |       | 108,955      |       |
| Karen M. Bohn       |       |       |       | 17,731,622 |       | 111,565      |       |
| Marshall L. Day     |       |       |       | 17,740,167 |       | 103,020      |       |
| Richard C. Dell     |       |       |       | 17,741,005 |       | 102,182      |       |
| Gerald A.  Erickson |       |       |       | 17,737,824 |       | 105,363      |       |
| Ronald A.  Erickson |       |       |       | 17,786,920 |       | 56,267       |       |
| David C. Pratt      |       |       |       | 17,731,327 |       | 111,860      |       |

 

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Theshareholders present in person or by proxy cast the following numbers of votes(in whole shares) in connection with the ratification of the selection ofErnst & Young LLP as our independent registered publicaccounting firm for the fiscal year ending February 2, 2008:
| **For**    | ** ** | **Against** | ** ** | **Abstentions** | ** ** | **Broker Non-Votes** | ** ** |
|------------|------------|-------------|------------|-----------------|------------|---------------------------|------------|
| 17,706,159 |       | 136,330     |       | 697             |       | —                    |       |

 

**ITEM 5.  OTHER INFORMATION**

Notapplicable.

**ITEM 6.  EXHIBITS**

The Exhibits filed with this report are set forth on the Exhibit Indexfiled as a part of this report immediately following the signatures to thisreport.

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**SIGNATURES**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized. 
|                    |   |   |     | GANDER MOUNTAIN COMPANY |
|--------------------|--------|--------|----------|-------------------------|
|               |   |   |     |                    |
|               |   |   |     |                    |
| September 18, 2007 |   |   |     | By:                     | /s/ Mark R. Baker |   |
|               |   |   |     |                    | Mark R. Baker |   |
|               |   |   | * * | * *                | *President and Chief Executive Officer* |
|               |   |   |     |                    | (Principal Executive Officer) |
|               |   |   |     |                    |   |   |
|               |   |   |     |                    |   |   |
| September 18, 2007 |   |   |     | By:                     | /s/ Robert J. Vold |   |
|               |   |   |     |                    | Robert J. Vold |
|               |   |   | * * | * *                | *Senior Vice President, Chief Financial Officer  and Treasurer* |
|               |   |   |     |                    | (Principal Financial and Accounting Officer) |
|                    |        |        |          |                         |  |  |  |

 

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**EXHIBIT INDEX**
| Exhibit No. | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                         | ** ** | **Method of Filing**          |
|-------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------|
| 3.1         |       | Amended and Restated Articles of Incorporation of  the Registrant                                                                                                                                                                                                                                                                                                                                                                       |       | Incorporated By Reference (1) |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                          |
| 3.2         |       | Amended and Restated Bylaws of the Registrant                                                                                                                                                                                                                                                                                                                                                                                           |       | Incorporated By Reference (2) |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                          |
| 10.1        |       | Form of Amendment to Employment Agreement for the  Registrant’s Executive Officers                                                                                                                                                                                                                                                                                                                                                 |       | Incorporated By Reference (3) |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                          |
| 10.2        |       | Letter Agreement dated July 10, 2007 by and between  the Registrant and Dennis M. Lindahl                                                                                                                                                                                                                                                                                                                                               |       | Incorporated By Reference (4) |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                          |
| 10.3        |       | Third Amended and Restated Loan and Security  Agreement, dated August 15, 2007, among Gander Mountain Company, Bank of  America, N.A., as administrative agent, Bank of America Securities, LLC, as  the lead arranger, Foothill Capital Corporation, as the syndication agent,  The CIT Group/Business Credit, Inc., as collateral agent, General Electric  Capital Corporation, as documentation agent, and the lenders named therein |       | Incorporated By Reference (5) |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                          |
| 31.1        |       | Rule 13a-14(a)/15d-14(a) Certification by Principal  Executive Officer                                                                                                                                                                                                                                                                                                                                                                  |       | Filed Electronically          |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                          |
| 31.2        |       | Rule 13a-14(a)/15d-14(a) Certification by Principal  Financial and Accounting Officer                                                                                                                                                                                                                                                                                                                                                   |       | Filed Electronically          |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                          |
| 32          |       | Section 1350 Certifications                                                                                                                                                                                                                                                                                                                                                                                                             |       | Filed Electronically          |

 

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(1)          Incorporatedby reference to Exhibit 3.3 to Amendment No. 1 to the Registrant’s RegistrationStatement on Form S-1 (Registration No. 333-112494), filed with the Commissionon March 15, 2004.

(2)          Incorporatedby reference to Exhibit 3.4 to Amendment No. 1 to the Registrant’s RegistrationStatement on Form S-1 (Registration No. 333-112494), filed with the Commissionon March 15, 2004.

(3)          Incorporated byreference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K datedJuly 9, 2007 (Commission File No. 000-50659), filed with the Commission on July13, 2007.

(4)          Incorporated byreference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K datedJuly 9, 2007 (Commission File No. 000-50659), filed with the Commission on July13, 2007.

(5)          Incorporated byreference to Exhibit 10 to the Registrant’s Current Report on Form 8-K datedAugust 15, 2007 (Commission File No. 000-50659), filed with the Commission onAugust 21, 2007.

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