Orange 21 Inc. announced that net sales for the second quarter ended June 30, 2005 were $10.4 million compared to $7.6 million in the second quarter of 2004, an increase of 36%. The company reported net income for the quarter of approximately $362,000 versus a net loss of approximately $84,000 last year. Earnings per diluted share for the second quarter were 4 cents on approximately 8.2 million average shares outstanding compared to a loss per share of 2 cents on approximately 4.5 million average shares outstanding in the same period a year ago.

Cash, cash equivalents, and short term investments at June 30, 2005, totaled $11.6 million.

“We are pleased with our results for second quarter 2005, particularly our strong sales growth of 36% year-over-year,” said Barry Buchholtz, chief executive officer. “We believe this demonstrates the increased awareness of our brands achieved through the execution of the strategic initiatives we have put in place. We look forward to taking this momentum into the second half of the year. We will continue to work on expanding global distribution, improving service levels, and developing innovative sales and marketing programs that reach our target audience and drive our business.”

Updated 2005 Guidance

In accordance with the company's policy to provide periodic earnings guidance, it remains comfortable with its previous annual revenue guidance of 25% – 30% growth and the current annual consensus estimate of 16 cents EPS. However, the company believes sales will be more heavily weighted toward the fourth quarter in 2005 due to selected goggle shipments that will occur later in the second half of the year.

The guidance discussion excludes the impact of legal costs associated with the Oakley and shareholder class action law suits. 

                          Orange 21, Inc.
                Consolidated Statements of Operations
                             (unaudited)

                       Three months ended          Six months ended
                            June 30,                   June 30,
                    ------------------------ -------------------------

                       2004         2005         2004         2005
                    ----------- ------------ ------------ ------------

Net sales           $7,647,545  $10,415,630  $14,050,961  $18,888,183
Cost of sales        3,066,510    4,786,473    6,310,875    9,184,167
                    ----------- ------------ ------------ ------------

Gross Profit         4,581,035    5,629,157    7,740,086    9,704,016
                    ----------- ------------ ------------ ------------

Operating expenses:
  Sales and
   marketing         2,561,719    3,050,056    4,827,084    5,918,557
  General and
   administrative    1,188,110    1,555,128    2,172,636    2,855,069
  Shipping and
   warehousing         192,311      297,402      354,671      589,591
  Research and
   development          98,154      178,381      187,205      314,456
                    ----------- ------------ ------------ ------------

    Total operating
     expenses        4,040,294    5,080,967    7,541,596    9,677,673
                    ----------- ------------ ------------ ------------

  Income from
   operations          540,741      548,190      198,490       26,343

Other (expense)
 income
  Interest
   (expense) income
   - net              (112,966)      86,302     (234,250)     150,413
  Foreign currency
   translation
   (loss) gain        (228,381)      32,686     (145,714)     (99,588)
  Other income
   (expense) - net      14,793       (8,570)        (175)     (12,621)
                    ----------- ------------ ------------ ------------
    Total other
     (expense)
     income           (326,554)     110,418     (380,139)      38,204
                    ----------- ------------ ------------ ------------
    Income (loss)
     before income
     taxes             214,187      658,608     (181,649)      64,547
Income tax
 provision             297,959      296,158      249,959      197,158
                    ----------- ------------ ------------ ------------
  Net (loss) income   $(83,772)    $362,450    $(431,608)   $(132,611)
                    =========== ============ ============ ============
Net (loss) earnings
 per common share
  Basic                 $(0.02)       $0.05       $(0.10)      $(0.02)
                    =========== ============ ============ ============
  Diluted               $(0.02)       $0.04       $(0.10)      $(0.02)
                    =========== ============ ============ ============