Orange 21 Inc. reported that net sales for the second quarter of 2006 were relatively flat at $10.3 million, a 1.4% decrease compared to $10.4 million in the second quarter of 2005. ORNG reported a net loss for the second quarter of approximately $758,000, or 9 cents per diluted share, compared to net income of approximately $362,000, or 4 cents per diluted share in the year-ago period.


The company also announced the appointment of Jerry Collazo as its Chief Financial Officer, succeeding Michael Brower who has resigned. Mr. Collazo will be responsible for all areas of finance and corporate planning for the company.


The company’s cash, cash equivalents, and short term investments at June 30, 2006, totaled approximately $4.9 million including $850,000 in restricted cash which represents the escrow account related to the LEM S.r.l. purchase.


“During the second quarter we made further progress on our rebuilding plan, however it is a slow process and we still have a fair amount of work to do,” said Barry Buchholtz, Chief Executive Officer. “On the positive side, our brand recognition continues to grow on a global basis. We continue to develop exceptional products, and demand is growing. In fact, our total bookings for the quarter increased 37% versus a year ago.”


Mr. Buchholtz added, “We have made significant progress at our recently acquired manufacturing plant, LEM, as well. In fact, in the month of June, production at LEM increased approximately 80% year-over-year. While we dont expect this kind of improvement every month, we believe it shows that we are moving in the right direction, and longer term, the improvements should result in improved product deliveries, improved efficiencies, and reduced costs.”


Regarding the appointment of Jerry Collazo, Mr. Buchholtz added, “We are very excited to have Jerry join our management team, and believe that he will be a strong addition to the company. Jerry has a strong financial background as well as demonstrated ability to manage complex financial organizations. We believe the depth and breadth of his experiences have prepared him well for his new responsibilities.”


Mr. Buchholtz concluded, “I would like to thank Mike Brower for his contributions to Orange 21 over the past several years, and wish him well in his future endeavors. Mike will be consulting for the company for a period of time to ensure a smooth transition.”


Jerry Collazo has over 20 years of diversified executive, operational and financial management experience. Mr. Collazo most recently served as the Chief Financial Officer of Channell Commercial Corporation, a publicly traded company providing telecommunications infrastructure and water conservation products including development and manufacturing operations throughout the US, Canada, Europe, Asia and Australia. Mr. Collazo began his career at Ernst & Young. A Certified Public Accountant, Mr. Collazo received an MBA at the University of California, Los Angeles.


The company continues to forecast 2006 annual net sales in the range of $46 – $48 million and a net loss of 15 cents to 20 cents per fully diluted share for the year. 

Orange 21 Inc. and Subsidiaries
Consolidated Statement of Operations
(unaudited) 
                      Three months ended         Six months ended
                           June 30,                  June 30,
                   ------------------------- -------------------------

                       2005         2006         2005         2006
                   ------------ ------------ ------------ ------------

Net sales          $10,415,630  $10,270,532  $18,888,183  $19,653,012
Cost of sales        4,786,473    4,760,827    9,184,167    9,628,073
                   ------------ ------------ ------------ ------------

Gross Profit         5,629,157    5,509,705    9,704,016   10,024,939
                   ------------ ------------ ------------ ------------

Operating
 expenses:
  Sales and
   marketing         3,050,056    3,495,165    5,918,557    7,001,758
  General and
   administrative    1,555,128    2,460,360    2,855,069    4,599,692
  Shipping and
   warehousing         297,402      473,788      589,591      950,079
  Research and
   development         178,381      253,025      314,456      518,882
                   ------------ ------------ ------------ ------------

    Total
     operating
     expenses        5,080,967    6,682,338    9,677,673   13,070,411
                   ------------ ------------ ------------ ------------

  Income (loss)
   from operations     548,190   (1,172,633)      26,343   (3,045,472)

    Other income
     (expense)         110,418       (3,767)      38,204      (72,217)
                   ------------ ------------ ------------ ------------
    Income (loss)
     before income
     taxes             658,608   (1,176,400)      64,547   (3,117,689)
Income tax
 provision
 (benefit)             296,158     (418,194)     197,158     (625,608)
                   ------------ ------------ ------------ ------------
  Net income
   (loss)             $362,450    $(758,206)   $(132,611) $(2,492,081)
                   ============ ============ ============ ============
Net income (loss)
 per common share
  Basic                  $0.05       $(0.09)      $(0.02)      $(0.31)
                   ============ ============ ============ ============
  Diluted                $0.04       $(0.09)      $(0.02)      $(0.31)