Orange 21 Sees 5% Q2 Revenue Gain

Net income reached $408,000, or 3 cents a share, versus loss of $254,000, or 2 cents, a year ago.

The three months ended June 30, 2010 and 2009 included approximately $0.2 million and $0, respectively, in additional direct operating expenses related to the addition of the Margaritaville™ and Melodies by MJB™ eyewear brands for which there were no sales during either period. The three months ended June 30, 2010 and 2009 also included $0.2 million and $0.2 million, respectively, in non-cash share-based compensation costs calculated in accordance with authoritative guidance issued by the Financial Accounting Standards Board.

“We are very pleased with this quarter's results,” commented Stone Douglass, the Company's Chief Executive Officer. “Gross margins increased to 58% for the three months ended June 30, 2010 from 46% during the comparable period in 2009, aided by more effective sourcing in Asia as well as improved operations and a more favorable Euro to U.S. Dollar exchange rate on purchases from LEM, our manufacturing subsidiary in Italy. The Company has continued to be rigorous in adhering to the cost control measures implemented over the last two years. We are especially excited that these results were achieved even though we had substantial direct and indirect additional operating costs related to our two newest brands, Margaritaville and Melodies by MJB™, for which sales have not yet begun.”