Despite increased sales of 2 percent, Spy Optic’s parent company, Orange 21 Inc., reported 2008 losses rose to $15.2 million from $8 million in 2007.
According to the release:
The 2008 net loss included non-cash charges of $8.4 million for goodwill impairment related to the acquisition of LEM S.r.l. (our primary sunglass manufacturer acquired in 2006), $3.5 million increase in our income tax valuation allowance, and $0.6 million in share-based compensation costs in accordance with FASB No. 123(R).
“The current recession continues to have a significant impact on our sales,” commented Stone Douglass, the company's chief executive officer. “The impact is being felt not just in the US, but overseas as well. During these last few months we have reacted swiftly to reduce operating expenditures in all our companies and increase our sales and marketing efficiencies. In addition, we have been seeking new opportunities on a global basis.
“In comparison to the prior year, we have reduced total operating expenses by approximately $4.1 million, excluding the $8.4 million non-cash goodwill impairment charge. In 2009, we have continued to reduce expenses further to offset the significant impact of the economy.
“We are fortunate that the recent fundraising efforts have given us working capital to help ensure that our expense cuts will not be at the expense of our sales, margins, development efforts and the value of our brand. In this tough financial market, we view our success in raising equity capital as a sign that our participating shareholders believe, as does our management team, in Orange 21's significant potential. Our reputation for quality, innovation and delivery is very strong in the industry. And combined with our recent restructuring efforts, we should be able to capitalize on opportunities that are presenting themselves.”
Jerry Collazo, chief financial officer, added, “During this difficult time we have been focused on laying a more solid foundation with many of our vendors and customers. We are all in this together and we fully appreciate the difficulty everyone is undergoing. As such, we have made every effort to work with vendors and customers. And we believe that these efforts will enhance business relationships and as the economy returns to growth we will reap financial rewards.”
Concluding, Douglass added, “We expect that the current economy will remain soft and as such we are operating very cautiously, but we are very confident and excited about new opportunities that are starting to unfold for Orange 21 and its shareholders.”