**Exhibit 99.1**
**RISK FACTORS**
     The risks and uncertainties described below are not the only ones facingour company. Additional risks and uncertainties also may impair our businessoperations. If any of the following risks actually occur, our business,financial condition and results of operations would likely suffer.
    ***Changes in customer shopping patterns could harm our sales*****.**
     Most of our stores are located in enclosed shopping malls and regionaloutlet centers. Our ability to sustain or increase the level of sales dependsin part on the continued popularity of malls and outlet centers as shoppingdestinations and the ability of malls and outlet centers, tenants and otherattractions to generate a high volume of customer traffic. Many factors beyondour control may decrease mall traffic, including, among other things, economicdownturns, the closing of anchor department stores, weather, concerns ofterrorist attacks, construction and accessibility to strip malls or alternativeshopping formats (such as catalogs, e-commerce or discount stores). Anychanges in consumer preferences and shopping patterns could adversely affectour financial condition and operating results.
    ***The high level of competition in our markets may lead to reduced sales andprofits*****.**
     The retail leather apparel and accessories markets are highly competitiveand fragmented. We compete with a broad range of other retailers, includingother specialty retailers, department stores, mass merchandisers anddiscounters, many of which have greater financial and other resources.Increased competition may reduce sales, increase operating expenses, decreaseprofit margins and negatively affect our ability to obtain site locations,sales associates and other employees. During 2003, we faced increasedcompetition from mass merchandisers and discounters. There can be no assurancethat we will be able to compete successfully in the future and, if we areunable to do so, our business, financial condition and operating results couldbe adversely affected.
    ***The uncertainty in general economic conditions has led to reduced consumerdemand for our leather apparel and accessories, and could adversely affect ourbusiness and liquidity*****.**
     Our future capital requirements depend on the sustained demand for ourleather products. Many factors affect the level of consumer spending on ourproducts, including, among others:
 • general business conditions; • interest rates; • the availability of consumer credit; • weather; • continued hostilities in the Middle East and othersignificant national and international events; and • taxation and consumer confidence in future economicconditions.
     Consumer purchases of discretionary items, such as our products, tend todecline during recessionary periods when disposable income is lower. Theuncertain outlook in the United States’ economy has adversely affected consumerspending habits and mall traffic, caused us to accelerate store closings, andresulted in lower than expected net sales on a quarterly and annual basis.
 

 

    ***Our inability to effectively respond to changes in fashion trends andconsumer demands could adversely affect our sales*****.**
     Our success depends on our ability to identify fashion and product trendsas well as our ability to anticipate, gauge and react swiftly to changes inconsumer demand. Our products must remain appealing for a broad range ofconsumers with diverse and changing preferences; however, our orders forproducts must be placed in advance of customer purchases. We cannot be certainthat we will be able to identify new fashion trends and adjust our product mixin a timely manner. If we misjudge market preferences, we may be faced withsignificant excess inventories for some products and missed opportunities forother products. In response, we may be forced to rely on additional markdownsor promotional sales to dispose of excess, slow-moving inventories, which mayhave a material adverse effect on our business, financial condition and resultsof operations.
     In addition, we cannot provide assurance that consumer sentiment towardand demand for leather will not change or that we will be able to react to anysuch changes effectively or at all. For example, certain countries, includingthe United States and Canada, that supply the hides used to make leatherproducts have experienced outbreaks of certain highly publicized diseases,namely Bovine Spongiform Encephalopathy (“mad-cow” disease) and hoof-and-mouthdisease. There can be no assurance that demand for our leather products willnot decline as a result of the publicity regarding these diseases or newscientific findings with respect to such diseases. If we are unable toanticipate, gauge and respond to changes in demand or if we misjudge fashiontrends, our business, financial condition and operating results could beharmed.
    ***Our comparable store sales and results of operations have declined overthe past three years and have not met expectations of analysts*****.**
     Our comparable store sales declined 6.8%, 7.0%, and 12.1% in 2003, 2002,and 2001, respectively. We had a net loss from continuing operations of $33.6million and $14.3 million in 2003 and 2002, respectively, and net income fromcontinuing operations of $7.8 million in 2001. Our comparable store sales areaffected by a variety of factors, including:
 • consumer shopping preferences; • actions by competitors or mall anchor tenants; • general economic conditions and, in particular, the retail sales environment; • fashion trends; • changes in our merchandise mix; • the timing of new store openings and the relativeproportion of new stores to mature stores; • maintaining appropriate inventory levels; • calendar shifts of seasonal periods; • weather conditions; and • timing of promotional events.
     An inability to generate comparable store increases could have a materialadverse effect on our business, financial condition and results of operations.Failure of results of operations to meet expectations of research analystscould decrease the price of our common stock.
    ***We may not be able to grow our business as planned***.
 

 

     Our long-term operating results will depend, in part, on our ability tosuccessfully open new stores and to effectively manage our existing business.Our ability to grow our business will be limited, however, if we are unable toimprove the sales performance and productivity of our existing stores. Ourfuture growth will also depend on our ability to:
 • anticipate fashion trends and design products,merchandise stores, manage inventory levels and take timely andnecessary markdowns in response to such trends; • introduce and expand new selling concepts; • identify, negotiate, lease and open stores in suitablelocations on a profitable and timely basis; • ensure the availability of and obtain the necessarycapital to operate our business; • consolidate and upgrade our distribution center andinformation systems in an efficient and timely manner; and • hire, train and retain qualified personnel, includingmanagement executives and hourly sales associates.
     We cannot assure you that we will be able to achieve all or any of theseobjectives.
     ***A decrease in the availability of leather or an increase in its pricecould harm our business*****.**
     The purchase of leather comprised approximately 59.5% and 62.8% of ourcosts of goods sold for leather apparel and 47.5% and 49.7% of the costs ofgoods sold for accessories in 2003 and 2002, respectively. A number of factorsaffect the price of leather, including the demand for leather in the shoe,furniture and automobile upholstery industries. In addition, leather supply isinfluenced by worldwide meat consumption and the availability of hides.Fluctuations in leather supply and pricing, which can be significant, may havea material adverse effect on our business, financial condition and results ofoperations.
     ***We could have difficulty obtaining merchandise from our foreign suppliers*****.**
     We import our leather garments and accessories from independent foreigncontract manufacturers located primarily in China and India. We do not havelong-term contracts or formal supply arrangements with our contractmanufacturers. In 2003, 90.0% of our leather garments and accessoriescontracted for manufacture were purchased from foreign suppliers, withapproximately 82.0% purchased from China and 8.0% purchased from India. Traderelations with China and India have traditionally been unstable. If traderelations with these countries or any other country from which we source goodsdeteriorate, or if any new or additional duties, quotas or taxes are imposed onimports from these countries, leather purchase and production costs couldincrease significantly, negatively impacting our sales prices, profitability orthe demand for leather merchandise. Further, we cannot predict whether any ofthe countries in which our products currently are manufactured or may bemanufactured in the future will be subject to trade restrictions imposed by theUnited States government, including the likelihood, type or effect of any suchrestrictions, or whether any other conditions having an adverse effect on ourability to source products will occur. In addition, it will take time for usto transition our sourcing to other countries. Certain other risks related toforeign sourcing include:
 • economic and political instability; • transportation delays and interruptions, including delays relating to labor disputes; • restrictive actions by foreign governments; • trade and foreign tax laws; • fluctuations in currency exchange rates and restrictions on the transfer of funds; and
 

 

 • the possibility of boycotts or other actions promptedby domestic concerns regarding foreign labor practices or otherconditions beyond our control.
     Any event causing a sudden disruption of imports from China, India orother foreign countries, including a disruption due to financial difficultiesof a supplier, could have a material adverse effect on our business, financialcondition and results of operations. In the event that commercialtransportation is curtailed or substantially delayed due to a dockworkers’strike or other similar work action, our business may be adversely impacted, aswe may have difficulty shipping merchandise to our distribution center andstores.
     ***The seasonality of our business could affect our profitability*****.**
     Since our leather outerwear and apparel products are most often purchasedduring the holiday season, we experience substantial fluctuations in our salesand profitability. We generate a significant portion of our sales from Octoberthrough January, which includes the holiday selling season. We generated 59.4%of our annual sales in that time period in 2003, and 31.6% in December alone.Because our profitability, if any, is historically derived in the fourthquarter, our annual results of operations have been, and will continue to be,heavily dependent on the results of operations from October through January.
     Given the seasonality of our business, misjudgments in fashion trends, theeffects of war and other significant national and international events, orunseasonably warm or severe weather during our peak selling season could have amaterial adverse effect on our financial condition and results of operations.Our results of operations may also fluctuate significantly as a result of avariety of other factors, including:
 • merchandise mix offered during the peak selling season; • the timing and level of markdowns and promotions by usduring the peak selling season; • the timing and level of markdowns and promotions by ourcompetitors during the peak selling season; • consumer shopping patterns and preferences; • the net sales contributed by seasonal stores; • the timing of certain holidays; and • the number of shopping days and weekends between Thanksgiving and Christmas.
     ***The instruments governing our outstanding debt place certain obligationson us and restrictions on our operations, which, if not met, could result inour inability to borrow under our senior credit facility or other penalties*****.**
     Covenants contained within our senior credit facility, as amended, requireus to meet certain financial tests and limit capital expenditures. Inaddition, certain covenants and restrictions under our senior credit facilitylimit our ability to pay cash dividends or make other distributions, to acquireor merge with another entity, to make investments, loans or guarantees, toborrow additional funds or dispose of assets and to create liens or otherencumbrances, possibly affecting our flexibility in planning for, and reactingto, changes in our business.
     The failure to comply with the covenants and restrictions contained in thesenior credit facility could, if not cured or waived, result in a defaultpermitting the senior lenders to accelerate payment of indebtedness (includingletters of credit and the Term B promissory note) under the senior creditfacility and allow them to pursue other remedies (including foreclosing theirliens on our assets).
 

 

     Our ability to meet our debt service obligations will be dependent uponour future performance, which will be subject to general economic conditionsand financial, business and other factors affecting our operations. If we areunable to generate sufficient cash flow from operations in the future toservice our debt, we may be required to refinance all or a portion of ourexisting debt or to obtain additional financing. There can be no assurancethat any such refinancing or additional financing would be possible or could beobtained on terms that are favorable to us.
     ***Our accounting policies and methods are key to how we report our financialcondition and results of operations, and they may require management to makeestimates about matters that are inherently uncertain*****.**
     Our accounting policies and methods are fundamental to how we record andreport our financial condition and results of operations. Our management mustexercise judgment in selecting and applying many of these accounting policiesand methods so that not only do they comply with generally accepted accountingprinciples, but also that they reflect management’s judgment as to the mostappropriate manner in which to record and report our financial condition andresults of operations. In some cases, management must select the accountingpolicy or method to apply from two or more alternatives, any of which might bereasonable under the circumstances, yet might result in our reportingmaterially different amounts than would have been reported under a differentalternative.
     We have identified two accounting policies as being “critical” to thepresentation of our financial condition and results of operations because theyrequire management to make particularly subjective and/or complex judgmentsabout matters that are inherently uncertain and because of the likelihood thatmaterially different amounts would be reported under different conditions orusing different assumptions. These critical accounting policies relate to thevaluation of inventory, and the valuation of property and equipment forimpairment. Because of the uncertainty of estimates about these matters, wecannot provide any assurance that we will not:
 • significantly increase our allowance for obsolete inventory; or • recognize a significant provision for impairment of our fixed assets at our stores.
     ***The loss of key members of our senior management team could adverselyaffect our business*****.**
     Our success depends largely on the efforts and abilities of our currentsenior management team. Their experience and worldwide contacts in the leatherproducts industry significantly benefit us. If we were to lose the benefit oftheir experience and contacts, our business could be adversely affected. We donot maintain key-man life insurance on any members of our senior managementteam.
     ***The sale into the market of the shares issued in our equity financing orissuable upon exercise of the warrants delivered in connection with our equityfinancing could decrease the price of our common stock or make it moredifficult to obtain additional financing in the future*****.**
     In connection with an equity financing on July 2, 2004, we issued17,948,718 shares of our common stock and warrants to purchase two millionshares of our common stock, subject to certain adjustments, to threeinstitutional investors. As consideration for their commitment to purchase ourcommon stock in the equity financing, we had previously issued warrants topurchase two million shares of our common stock, subject to certainadjustments, to such institutional investors. Increasing the number ofadditional shares of common stock that may be eventually sold into the marketby approximately 21.9 million shares could have a negative impact on the valueof our shares. In addition, if
 

 

we need to obtain additional financing, the terms on which we may obtainadditional financing may be adversely affected.
     ***Ownership of our common stock is concentrated*****.**
     Our directors and executive officers, excluding Ted Weschler, a generalpartner of the general partner of Peninsula Investment Partners, L.P.,beneficially own, in the aggregate, 10.8 percent of our common stock as of July31, 2004. As of July 31, 2004, Peninsula Investment Partners, L.P.(“Peninsula”) beneficially owns 44.0 percent of our common stock. Either thedirectors and officers voting together or Peninsula voting alone will be ableto exert significant influence over our business and affairs, including:
 • the election of individuals to our board of directors; • the adoption of amendments to our Amended and RestatedArticles of Incorporation; and • the approval of certain mergers, additional financing,sales of assets and other business acquisitions or dispositions.
     In addition, the ownership concentration of our stock may limit liquidityand cause shareholders to experience price fluctuations when selling largeblocks of our stock.
     ***The market price for our common stock may be volatile*****.**
     Our stock price has been, and is expected to continue to be, highlyvolatile. There could be an immediate adverse impact on our stock price as aresult of:
 • any future sales of our common stock or other securities; • a decline in any month or quarter of our revenues or earnings; • a decline in any month or quarter of comparable store sales; • a deviation in our revenues, earnings or comparablestore sales from levels expected by securities analysts; • changes in financial estimates by securities analysts; and • changes in market valuations of other companies in the same or similar markets.
     In addition, the Nasdaq National Market has experienced extreme volatilitythat has often been unrelated to the performance of particular companies.Future market fluctuations may cause our stock price to fall regardless of ourperformance. Such volatility may limit our future ability to raise additionalcapital.
     ***We rely on third parties for upgrading and maintaining our informationsystems*****.**
     The efficient operation of our business is heavily dependent on ourinformation systems. In particular, we rely heavily on the automated sortationsystem used in our distribution center and the merchandise management systemused to track sales and inventory. We also rely on a third-party package forour accounting, financial reporting and human resource functions. We depend onour vendors to maintain and periodically upgrade these systems so that thesesystems continue to support our business. The software programs supporting ourautomated sorting equipment and processing our inventory management informationwere licensed to us by independent software developers. The inability of thesedevelopers to continue to maintain and upgrade these software programs woulddisrupt our operations if we were unable to convert to alternate systems in anefficient and timely manner.
 

 

     ***War, acts of terrorism, or the threat of either may negatively impact theavailability of merchandise and otherwise adversely impact our business*****.**
     In the event of war or acts of terrorism, or if either is threatened, ourability to obtain merchandise available for sale in our stores may benegatively affected. We import a substantial portion of our merchandise fromother countries. If imported goods become difficult or impossible to bringinto the United States, and if we cannot obtain such merchandise from othersources at similar costs, our sales and profit margins may be adverselyaffected.
     The majority of our stores are located in enclosed shopping malls andregional outlet centers. In response to the terrorist attacks of September 11,2001, security has been heightened in public areas. Any further threat ofterrorist attacks or actual terrorist events, particularly in public areas,could lead to lower customer traffic in shopping malls and outlet centers. Inaddition, local authorities or mall management could close shopping malls andoutlet centers in response to any immediate security concern. Mall closures,as well as lower customer traffic due to security concerns, could result indecreased sales that would have a material adverse effect on our business,financial condition and results of operations.
     ***Any significant interruption in the operation of our corporate offices anddistribution center could have a material adverse effect on our business*****.**
     Our corporate offices and distribution center are in one location. Ouroperations could be materially and adversely affected if a catastrophic event(such as, but not limited to, fires, tornadoes, floods or acts of terrorism)impacts the use of these facilities. There can be no assurance that we wouldbe successful in obtaining alternative facilities in a timely manner if such acatastrophic event were to occur.
     ***The public sale of our common stock by existing shareholders couldadversely affect the price of our common stock*****.**
     The market price of our common stock could decline as a result of marketsales by our existing shareholders or the perception that such sales willoccur. These sales also might make it difficult for us to sell equitysecurities in the future at a time and at a price that we deem appropriate. Asof July 31, 2004, 2,043,166 shares were subject to issuance upon the exerciseof vested stock options previously granted by us, all of which would be freelytradable if issued, subject to compliance with Rule 144 in the case of ouraffiliates. In addition, 325,283 shares of our common stock have been reservedfor issuance pursuant to our employee benefit plans.