Orange 21 Inc. reported that net sales for the second quarter of 2006 were relatively flat at $10.3 million, compared to $10.4 million in the second quarter of 2005. California continues to be the company’s largest market in the U.S, accounting for 54% of domestic sales. However 81% of ORNG’s 200 new accounts opened during the quarter were opened in other areas. The company continues to place a heavy focus on the east coast with grass roots event sponsorships and the formation of a merchandising team specifically for this geographic region.

“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.”

The company continues to grow its floor and shelf space at retail and orders continue to grow in the double digits, but deliver and manufacturing issues at its newly acquired Italian facility plague the top and bottom line. Orange 21’s new COO, Jerry Kohlscheen, told analysts and the media that production at this facility increased 80% last month and he expects more meaningful gains in the months to come.

As a result of these delivery issues, 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.