Orange 21 Inc. Reports Financial Results for Third Quarter 2008 and Announces Investor Conference Call

Orange 21 Inc. (NASDAQ:ORNG), a leading developer of brands that produce premium products for the action sports and youth lifestyle markets, today announced financial results for the three and nine months ended September 30, 2008.

We achieved net income of $6,000 for the three-month period ended September 30, 2008, compared to a net loss of $58,000 for the comparable period in 2007. We sustained a net loss of $1.1 million for the nine-month period ended September 30, 2008, compared to a net loss of $3.3 million for the comparable period in 2007. Consolidated net sales for the three- and nine-month periods ended September 30, 2008 were $12 million and $37.6 million, respectively, compared to $13.2 million and $34.5 million for the comparable periods in 2007.

"We are clearly feeling the effects of the general slowdown in the economy,” commented Stone Douglass, the Company’s newly appointed Chief Executive Officer. "In response, we are doing everything we can to maintain our sales while dramatically reducing expenses.

"Examples of recent expense reductions include:

• $402,000 or 16% reduction in G&A expense in the third quarter as compared to the third quarter of 2007;
• $59,000 or 2% reduction in sales and marketing expense in the third quarter as compared to the third quarter of 2007; and
• $129,000 or 30% reduction in R&D expense in the third quarter as compared to the third quarter of 2007.

"Further, we have implemented several additional cost reduction measures and we expect to begin to see tangible results from those initiatives in the fourth quarter of this year and expect more robust savings in 2009.

"We are also focused on improving our efficiencies. Since joining the board in August, I have already made multiple trips to Italy to focus on streamlining our manufacturing operations. We expect to announce modifications to our organizational structure in the coming weeks that we believe will result in substantial savings in 2009. In addition, we are beginning to make changes to our production processes that we believe will more fully utilize our manufacturing capacity, thus further reducing our cost of goods sold and G&A expense.

"Although we are focused on reducing expenses, we are conducting a top-down analysis of the business to ensure that our cuts will not be at the expense of top line sales, leading product designs or our reputation for quality and innovativeness in the market.”

Jerry Collazo, the Company’s Chief Financial Officer, further commented, "We have met with several of our business partners, including vendors and customers, in an effort to renew and strengthen these relationships. For example, we are working with our vendors to improve our purchasing terms and are working with our existing manufacturing customers to better understand how we can service their needs and perhaps provide additional manufacturing services. Finally, we have commenced a new sales initiative. We are sending our sales managers into the field to visit all of our customers and independent sales representatives regularly in order to better connect with customers and help them to better market and sell our products. We believe that we will begin to see dividends from these efforts in the fourth quarter, notwithstanding the downturn in the economy.”

Concluding, Stone Douglass added, "Notwithstanding these efforts, we absolutely expect to face challenges in the market. As you know, retail sales in general are down substantially compared to last year. We expect to continue to feel pressure on our sales and collections as a result. However, given the strength of our brand, quality of our products and recent initiatives to improve sales and control costs, we remain optimistic about our future prospects.”

Investor Conference Call

We invite you to join us for an investor conference call on Monday, November 17, 2008 at 2:00 p.m. Pacific time. The dial-in number for the call in North America is 1-866-543-6407 and 1-617-213-8898 for international callers. The participant pass code is 40910306. The call also will be webcast live on the Internet and can be accessed by logging onto 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 17, 2008. 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 20042680.

About Orange 21 Inc.

Orange 21 designs, develops, markets and produces premium products for the action sport and youth lifestyle markets. Orange 21’s primary brand, Spy Optic(TM), manufactures sunglasses and goggles targeted toward the action sports and youth lifestyle markets.

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," "potential" or "continue," the negative of such terms or other comparable terminology. Specifically, comments in this press release regarding our future prospects, cost saving measures, improved efficiencies, streamlined operations, organizational changes, the strength of and demand for our brand and the success of our sales and marketing initiatives and efforts to negotiate better purchasing terms with our vendors 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 materially 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 and Euro; changes in commodity prices; our ability to source raw materials and finished products at favorable prices; risks related to the limited visibility of future orders; our ability to continue to develop, produce and introduce innovative new products in a timely manner; 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; 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.