CARLSBAD, CA, Nov 14, 2011 (MARKETWIRE via COMTEX) --
Orange 21 Inc. (OTCBB: ORNG) today announced financial results for
the quarter ended September 30, 2011.
Net sales increased by $2.3 million, or 33%, to $9.2 million for the
three months ended September 30, 2011, compared to $6.9 million on a
"pro forma" basis for the three months ended September 30, 2010. "Pro
forma" numbers exclude the net sales from our LEM, S.r.l. subsidiary
that we sold effective December 31, 2010. Sales of core SPY(R)
products increased by $1.6 million and closeout sales, the vast
majority of which were from our licensed brands, increased by $0.7
million. Net sales for the three months ended September 30, 2010,
including the net sales from LEM, were reported as $8.2 million.
Net sales increased by $2.2 million, or 10%, to $24.9 million for the
nine months ended September 30, 2011, compared to $22.7 million on a
"pro forma" basis for the nine months ended September 30, 2010. Sales
of core SPY(R) products increased by $1.6 million, closeout sales of
our SPY(R) products decreased by $0.5 million, and sales of our
licensed brands, the vast majority of which were closeout sales,
increased by $1.1 million. Net sales for the nine months ended
September 30, 2010, including the net sales from LEM, were reported
as $26.0 million.
The Company incurred a net loss of $3.0 million for the three months
ended September 30, 2011 compared to a net loss of $0.9 million for
the three months ended September 30, 2010. The net loss for the three
months ended September 30, 2011 included the impact of lower gross
margin as a percent of sales due to increased inventory reserves of
approximately $0.7 million related to our licensed brands and
significant closeout sales of licensed brands at no or low margin, as
well as increased sales and marketing spending related to the core
SPY(R) products.
"We are very pleased with the growth that we generated this quarter,
particularly in our core SPY(R) products which had nice growth in
both goggles and sunglasses, in North America and internationally.
This is especially encouraging following the significant decline the
Company had in the first quarter of the year," said Orange 21
President Michael Marckx. "Our new team's focus on the marketing,
product development and sales programs to leverage the core SPY(R)
brand appears to be gaining traction on many fronts."
Carol Montgomery, Orange 21's Chief Executive Officer, added:
"Improvements to internal systems and processes, increased clarity of
goals and development of the organization these past few months have
strengthened our ability to succeed and grow."
The 2010 "pro forma" net sales amounts described above exclude $1.3
million and $3.3 million during the three and nine month periods
ended September 30, 2010, respectively, of sales products
manufactured for third party customers rather than for the Company by
its former Italian manufacturing subsidiary, LEM. LEM was sold on
December 31, 2010. As such LEM's operations were not included in the
Company's consolidated results for the three or nine month periods
ended September 30, 2011. However, LEM sales remain included in our
consolidated results for the three and nine month periods ended
September 30, 2010. Set forth below are "pro forma" financial tables
which present our operating results for the three and nine months
ended September 30, 2010, as if we did not own LEM during those
periods.
Investor Conference Call:
We invite you to join us for an investor
conference call on Wednesday, November 16, 2011, at 1:30 p.m. PST.
The dial-in number for the call in North America is 1-866-770-7125
and 1-617-213-8066 for international callers. The participant pass
code is 41186689. The call will also be webcast live on the Internet
and can be accessed by logging on at www.orangetwentyone.com.
The webcast will be archived on the Company's website for at least 60
days following the call. An audio replay of the conference call will
be available for seven days beginning approximately two hours after
the completion of the call on November 16, 2011. The audio replay
dial-in number for North America is 1-888-286-8010 and 1-617-801-6888
for international callers. The replay pass code is 52179448.
About Orange 21 Inc.:
We design, develop, market and sell premium
SPY(R) brand products for the action sports, motorsports, snow
sports, cycling, and multi-sports and their attendant lifestyle
markets of fashion, music and entertainment and, specifically, active
people within youth demographics in these subcultures. Our principal
products, sunglasses, goggles and optical frames (the optical product
line was just launched in September of this year) are marketed under
the SPY(R) brand. In addition, the Company also sells eyewear
products under several third party licensed brands.
Safe Harbor Statement:
This press release contains forward-looking statements. These
statements relate to future events or future financial performance
and are subject to risks and uncertainties. In some cases, you can
identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "anticipate," "believe," "feel,"
"estimate," "predict," "hope," the negative of such terms,
expressions of optimism or other comparable terminology.
Specifically, comments in this press release regarding our ability to
leverage the core SPY Optic(TM) brand are forward-looking statements
and are subject to inherent risks. These statements are only
predictions. Actual events or results may differ materially. Factors
that could cause actual results to differ from those contained in the
forward-looking statements include, but are not limited to: the
general conditions of the domestic and global economy, changes in
consumer discretionary spending; changes in the value of the U.S.
dollar, Canadian dollar and Euro; changes in commodity prices; our
ability to source raw materials and finished goods at favorable
prices; risks related to the limited visibility of future orders; our
ability to continue to develop, and introduce innovative new products
in a timely manner; our ability to forecast future demand; the
ability of our key foreign product suppliers to continue to supply to
our forecasted demand, our ability to identify and execute
successfully cost-control initiatives without adversely impacting
sales; the performance of new products and continued acceptance of
current products; our execution of strategic initiatives and
alliances; uncertainties associated with intellectual property
protection for our products; our ability to improve working capital
management, particularly the level of inventory; our ability to
obtain additional capital, the ability of our new management team to
positively impact the business, and other risks identified from time
to time in our filings made with the U.S. Securities and Exchange
Commission. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee
future results. Moreover, we assume no responsibility for the
accuracy or completeness of such forward-looking statements and
undertake no obligation to update any of these forward-looking
statements.
Note Regarding Pro Forma Information in Period Over Period
Comparisons
Our period over period comparisons discussed above that
are labeled "pro forma" are derived from the "pro forma" financial
information below and from Footnote 1 to the Consolidated Financial
Statements in our Form 10-Q for the quarter ended September 30, 2011.
The references above and in the tables below to "pro forma"
information refer to the financial data excluding the operating
results for LEM for the quarter and nine months ended September 30,
2010. We believe presentation of the pro forma financial data which
is required to be presented in footnotes to the consolidated
financial statements is also useful to understand how the Company has
performed in the most recent operating periods compared to the
Company's performance as if LEM were not included in its operating
results for the quarter and nine months ended September 30, 2010.
ORANGE 21 INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands, except number of shares and per share amounts)
September 30, December 31,
------------- -------------
2011 2010
------------- -------------
(Unaudited)
Assets
Current assets
Cash $ 498 $ 263
Accounts receivable, net 5,288 4,173
Inventories, net 7,894 8,902
Prepaid expenses and other current assets 505 618
Income taxes receivable - 14
------------- -------------
Total current assets 14,185 13,970
Property and equipment, net 742 957
Intangible assets, net of accumulated
amortization of $674 and $631 at September
30, 2011 and December 31, 2010, respectively 78 122
Other long-term assets 52 50
------------- -------------
Total assets $ 15,057 $ 15,099
============= =============
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Lines of credit $ 2,496 $ 2,235
Current portion of capital leases 57 27
Current portion of notes payable 485 13
Accounts payable 2,290 1,693
Accrued expenses and other liabilities 3,314 3,007
------------- -------------
Total current liabilities 8,642 6,975
Capitalized leases, less current portion 142 38
Notes payable, less current portion 51 61
Notes payable to stockholder 10,500 7,000
------------- -------------
Total liabilities 19,335 14,074
Stockholders' equity (deficit)
Preferred stock: par value $0.0001;
5,000,000 shares authorized; none issued - -
Common stock: par value $0.0001; 100,000,000
shares authorized; 12,930,440 and
11,980,934 shares issued and outstanding at
September 30, 2011 and December 31, 2010,
respectively 1 1
Additional paid-in-capital 43,187 40,972
Accumulated other comprehensive income 538 551
Accumulated deficit (48,004) (40,499)
------------- -------------
Total stockholders' equity (deficit) (4,278) 1,025
------------- -------------
Total liabilities and stockholders' equity
(deficit) $ 15,057 $ 15,099
============= =============
ORANGE 21 INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands, except per share
amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Net sales $ 9,186 $ 8,224 $ 24,875 $ 26,020
Cost of sales 5,941 4,353 13,334 12,918
--------- --------- --------- ---------
Gross profit 3,245 3,871 11,541 13,102
Operating expenses:
Sales and marketing 3,421 2,268 8,863 6,537
General and administrative 1,972 1,812 6,247 5,667
Shipping and warehousing 164 235 454 802
Research and development 130 375 445 1,186
Other operating expense - - 1,952 -
--------- --------- --------- ---------
Total operating expenses 5,687 4,690 17,961 14,192
--------- --------- --------- ---------
Loss from operations (2,442) (819) (6,420) (1,090)
Other income (expense):
Interest expense (413) (160) (964) (397)
Foreign currency transaction
gain (loss) (81) 85 (68) 76
Other (expense) income (27) 20 (26) 84
--------- --------- --------- ---------
Total other expense (521) (55) (1,058) (237)
--------- --------- --------- ---------
Loss before provision for
income taxes (2,963) (874) (7,478) (1,327)
Income tax provision 21 58 27 134
--------- --------- --------- ---------
Net loss $ (2,984) $ (932) $ (7,505) $ (1,461)
========= ========= ========= =========
Net loss per share of Common
Stock
Basic $ (0.23) $ (0.08) $ (0.59) $ (0.12)
========= ========= ========= =========
Diluted $ (0.23) $ (0.08) $ (0.59) $ (0.12)
========= ========= ========= =========
Shares used in computing net
loss per share of Common Stock
Basic 12,888 11,961 12,675 11,948
========= ========= ========= =========
Diluted 12,888 11,961 12,675 11,948
========= ========= ========= =========
ORANGE 21 INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(Thousands)
The following unaudited pro forma condensed consolidated financial
statement of operations for the three months ended September 30, 2010
has been presented as if the deconsolidation of LEM had occurred on
July 1, 2010 (in thousands).
Unaudited
Three Unaudited
Months Ended Pro Forma Unaudited
September 30, Adjustments Pro Forma
2010 (1) (2) Results (3)
------------- ------------- -------------
Net sales $ 8,224 $ (1,314) $ 6,910
Cost of Sales 4,353 (580) 3,773
------------- ------------- -------------
Gross profit (loss) 3,871 (734) 3,137
Operating expenses:
Sales and marketing 2,268 (44) 2,224
General and administrative 1,812 (221) 1,591
Shipping and warehousing 235 (98) 137
Research and development 375 (170) 205
------------- ------------- -------------
Total operating expenses 4,690 (533) 4,157
------------- ------------- -------------
Loss from operations (819) (201) (1,020)
Other income (expense):
Interest expense (160) 32 (128)
Foreign currency transaction
gain 85 (8) 77
Other expense 20 (5) 15
Loss on deconsolidation of LEM - (1,444) (1,444)
------------- ------------- -------------
Total other income (expense) (55) (1,425) (1,480)
------------- ------------- -------------
Income (loss) before provision
(benefit) for income taxes (874) (1,626) (2,500)
Income tax provision (benefit) 58 (49) 9
------------- ------------- -------------
Net Loss $ (932) $ (1,577) $ (2,509)
============= ============= =============
(1) Represents the Company's actual (as reported) consolidated results
of operations for the three months ended September 30, 2010.
(2) Represents LEM's results of operations for the three months ended
September 30, 2010 and intercompany eliminations. These pro forma
adjustments include (i) sales, cost of sales and gross profit
associated with LEM's sales to third parties, (ii) intercompany
eliminations to adjust LEM's gross profit associated with the
products produced by LEM for other subsidiaries of the Company and
which were sold by the Company's other subsidiaries to third parties
during the period presented, and (iii) operating and other expenses
incurred by LEM. Also includes the adjustment for the loss on sale of
90% of LEM as if it had occurred on July 1, 2010. This information is
provided to show the effect of the elimination of LEM's operations
from the Company's business.
(3) Represents the pro forma consolidated results of operations of
the Company and its remaining wholly owned subsidiaries, O21NA and
O21 Europe, for the three months ended September 30, 2010. As noted
above, this table assumes an effective date of July 1, 2010 for the
deconsolidation of LEM. Accordingly, while the results of LEM for the
three months ended September 30, 2010 would be eliminated, the
recording of the deconsolidation would result in a loss of $1.4
million on July 1, 2010, which would result in this $1.4 million loss
being recorded for the three months ended September 30, 2010.
ORANGE 21 INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(Thousands)
The following unaudited pro forma condensed consolidated financial
statement of operations for the nine months ended September 30, 2010
has been presented as if the deconsolidation of LEM had occurred on
January 1, 2010 (in thousands).
Unaudited
Nine Unaudited
Months Ended Pro Forma Unaudited
September 30, Adjustments Pro Forma
2010 (1) (2) Results (3)
------------- ------------- -------------
Net sales $ 26,020 $ (3,339) $ 22,681
Cost of Sales 12,918 (866) 12,052
------------- ------------- -------------
Gross profit (loss) 13,102 (2,473) 10,629
Operating expenses:
Sales and marketing 6,537 (185) 6,352
General and administrative 5,667 (884) 4,783
Shipping and warehousing 802 (384) 418
Research and development 1,186 (603) 583
------------- ------------- -------------
Total operating expenses 14,192 (2,056) 12,136
------------- ------------- -------------
Loss from operations (1,090) (417) (1,507)
Other income (expense):
Interest expense (397) 94 (303)
Foreign currency transaction
gain 76 - 76
Other expense 84 (16) 68
Loss on deconsolidation of LEM - (1,170) (1,170)
------------- ------------- -------------
Total other income (expense) (237) (1,092) (1,329)
------------- ------------- -------------
Income (loss) before provision
(benefit) for income taxes (1,327) (1,509) (2,836)
Income tax provision (benefit) 134 (132) 2
------------- ------------- -------------
Net loss $ (1,461) $ (1,377) $ (2,838)
============= ============= =============
(1) Represents the Company's actual (as reported) consolidated results
of operations for the nine months ended September 30, 2010.
(2) Represents LEM's results of operations for the nine months ended
September 30, 2010 and intercompany eliminations. These pro forma
adjustments include (i) sales, cost of sales and gross profit
associated with LEM's sales to third parties (ii) intercompany
eliminations to adjust LEM's gross profit associated with the
products produced by LEM for other subsidiaries of the Company and
which were sold by the Company's other subsidiaries to third parties
during the period presented, and (iii) operating and other expenses
incurred by LEM. Also includes the adjustment for the loss on sale of
90% of LEM as if it had occurred on January 1, 2010. This information
is provided to show the effect of the elimination of LEM's operations
from the Company's business.
(3) Represents the pro forma consolidated results of operations of
the Company and its remaining wholly owned subsidiaries, O21NA and
O21 Europe, for the nine months ended September 30, 2010. As noted
above, this table assumes an effective date of January 1, 2010 for
the deconsolidation of LEM. Accordingly, while the results of LEM for
the nine months ended September 30, 2010 would be eliminated, the
recording of the deconsolidation would result in a loss of $1.2
million on January 1, 2010, which would result in this $1.2 million
loss being recorded for the nine months ended September 30, 2010.
CONTACTS:
Alain Mazer
Marketing Communications Manager
Michael D. Angel
Interim Chief Financial Officer
760-804-8420
Fax: 760-804-8442
www.orangetwentyone.com
Orange 21 Inc.
2070 Las Palmas Drive
Carlsbad, CA 92011
PH: (760) 804-8420
FX: (760) 804-8442
SOURCE: Orange 21 Inc.
http://www.orangetwentyone.com/
