Orange 21 Inc. reported that consolidated net sales for the three months ended Sept. 30, were $8.8 million compared to net sales of $12.0 million a year ago. The company incurred a net loss of $1.1 million for the quarter compared to net income of $6,000 a year earlier.

The net loss for the quarter included a $700,000 increase in inventory reserves for slow moving and obsolete inventory and $115,000 in non-cash share-based compensation costs in accordance with FASB authoritative guidance. Cash generated from operating activities during the three months ended September 30, 2009 was $2.1 million and total cash generated during the prior comparable period was $0.4 million.

“The current recession continues to have a significant impact on the retail environment and our global sales. As such we will continue to control costs and improve operational efficiencies where possible to minimize future possible losses,” commented Stone Douglass, the Company’s Chief Executive Officer. “During the most recent quarter, we reduced total operating expenses by approximately $1.9 million from the same period last year and expect to continue to benefit from cost savings efforts during the fourth quarter of 2009.” Concluding, Mr. Douglass added, “We are very excited about possible new opportunities that are unfolding for Orange 21 and its shareholders and look forward to rolling out our O’Neill Eyewear offerings in 2010.”