Exhibit 99.1
FOR IMMEDIATE RELEASE
TALON INTERNATIONAL, INC
REPORTS THIRD QUARTER 2007 RESULTS
ZIPPER SALES INCREASE 31% FOR THE FIRST NINE MONTHS OF 2007
LOS ANGELES, CALIF. -- NOVEMBER 19, 2007 -- Talon International, Inc. (AMEX:
TLN), formerly Tag-It Pacific, Inc., a leading global supplier of zippers,
apparel fasteners, trim and interlining products, reported financial results for
the third quarter and nine months ended September 30, 2007.
Sales for the three months ended September 30, 2007 were $9.0 million,
reflecting a decline of approximately $4.4 million from the same period of 2006.
Sales for the nine months ended September 30, 2007 were $31.7 million, a decline
from the same period in 2006 by $6.6 million. The sales decrease for both the
quarter and nine months from the prior year principally resulted from a decline
in waistband product sales as a result of the expiration of an exclusive sales
contract for these products in 2006.
Sales of waistband products were $43,000 for the three months ended September
30, 2007 as compared to $3.6 million for the same period in 2006, and waistband
product sales for the nine months ended September 30, 2007 were $681,000 as
compared to $8.0 million for the same nine month period in 2006. Sales of the
waistband products will continue to be minimal for the balance of 2007 as new
customer programs are continuing to be developed for future production. Sales of
waistband products for all of 2006 were approximately $9.5 million.
"The Company was contractually prohibited from marketing waistband products
under the previous exclusive contract until that contract expired in October of
2006, said Stephen Forte, chief executive officer of Talon International, Inc.
"Consequently, we expected a sharp sales decline from this product group, until
we could initiate our marketing efforts, and begin to see the results from these
efforts. The sales cycle for products of this nature is frequently 12 to 18
months. We are just now beginning to see some tangible positive results as
orders for these products are now being received from several customers."
Talon zipper sales for the nine months ended September 30, 2007 were $17.5
million, reflecting a $4.1 million gain, or a 31% increase, over the same
nine-month period in 2006. For the three months ended September 30, 2007 Talon
zipper sales were $4.2 million, as compared to $4.1 million the same period in
2006. Sales for the nine months ended September 30, 2007 increased over the
prior year as a result of the company's expansion into multiple areas throughout
China and Southeast Asia. Sales for the three months ended September 30, 2007 as
compared to the same period in the prior year, increased at a lesser rate than
for the nine months due in part to additional China VAT taxes and export quotas
imposed on garment manufacturers during the quarter ended September 30, 2007,
and which resulted in manufacturers accelerating some requirements into the
previous quarter and shifting production to Asian factories outside China.
Forte added, "We believe the significant sales growth of our Talon zipper
products year-to-date is reflective of the growing success of our core strategy
to capitalize on the global opportunities within the Talon brand. As the results
reflect, we are realizing significant favorable results as we rapidly expand
into new markets and team with apparel makers who welcome an alternative global
supplier of zipper products with a reputation for superior quality."
Trim product sales for the nine months ended September 30, 2007 were $13.5
million as compared to $17.0 million for the same period in 2006. Sales of Trim
products for the three months ended September 30, 2007 were $4.7 million as
compared with $5.7 million for the same period in 2006. The Trim product sales
decline for the nine months ended September 30, 2007 from the prior year is
primarily the result of the following: approximately $700,000 in revenues
recognized in 2006 that resulted from the restatement of a 2005 agreement; the
result of approximately $2.0 million in sales within Mexico during 2006, which
operations we exited during the third quarter of 2006; and from fewer and
smaller programs with our customers in 2007 as compared to 2006. Trim sales for
the three months ended September 30, 2007 declined from the same period in 2006
principally as a result of the decline in sales within Mexico by approximately
$700,000 and from fewer trim programs in 2007.
For the third quarter ended September 30, 2007, the company reported a net loss
of $3.7 million, or a net loss of $0.18 per share, as compared to net income of
$339,000, or $0.02 per diluted share, for the same period in 2006. For the nine
months ended September 30, 2007, the company reported a net loss of $4.0
million, or a net loss of $0.21 per share, as compared to a net income of
$264,000, or $0.01 per share, for the same period in 2006.
The net loss for the three and nine months ended September 30, 2007 includes an
impairment charge of $2.1 million for a note receivable from 2006 that defaulted
in September 2007. The net loss for the three and nine months ended September
30, 2007 as compared with the same periods in 2006 is principally attributable
to the decline in overall revenues, offset in part by improvements in other
components of gross margin.
Operating expenses for the nine months ended September 30, 2007 were $12.0
million (which included the impairment charge of $2.1 million), or approximately
$2.0 million more than the operating expenses for same period in 2006. Operating
expense for the three months ended September 30, 2007 were $5.6 million
(including the impairment charge of $2.1 million), which was approximately $2.1
million more than the operating expenses for the same period in 2006. "Operating
costs are closely controlled and we concentrate our spending increases to
support our expansion plans and continually seek cost reductions in our service
and administrative costs worldwide." said Forte.
Net cash provided by operating activities for the nine months ended September
30, 2007 was $1.3 million despite the year to date net loss, and cash for the
first nine months decreased from December 31, 2006 by $613,000 to $2.3 million
at September 30, 2007. During the three months ended September 30, 2007, the
company paid in full $12.5 million in previously outstanding convertible notes
after completing a $14.5 million credit facility in June 2007 designed to retire
these notes and provide additional funds for the company's growth. In November,
2007 the company amended the $14.5 million credit facility to provide for more
flexibility under certain performance covenants in the agreement and to expand
the Revolver borrowing base available to the company during the next two
quarters to ensure ample operating capital to fund its growth and operations. In
exchange these amendments, the company agreed to issue to its lender 250,000
shares of our common stock and to reduce the exercise price of warrants
previously issued to the lender to $0.75 per share.
# # #
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CONFERENCE CALL
Talon International will hold a conference call later today to discuss its third
quarter financial results. Talon's CEO Stephen P. Forte and CFO Lonnie D.
Schnell will host the call starting at 4:30 P.M. Eastern Time. A question and
answer session will follow their presentation.
To participate in the call, dial the appropriate number 5-10 minutes prior to
the start time, request the Talon International conference call and provide the
conference ID.
Date: Tuesday, November 19, 2007
Time: 4:30 pm Eastern (1:30 pm Pacific)
Domestic callers: 1-800-322-9079
International callers: 1-973-582-2717
Conference ID#: 9483352
Internet Simulcast: http://viavid.net/dce.aspx?sid=00004903
If you have any difficulty connecting with the conference call or webcast,
please contact the Liolios Group at 949-574-3860.
A replay of the call will be available later that evening and will be accessible
until December 3, 2007. The replay call-in number is 1-877-519-4471 for domestic
callers and 1-973-341-3080 for international. The conference ID is # 9483352.
ABOUT TALON INTERNATIONAL, INC.
Talon International, Inc. is a global supplier of apparel fasteners, trim and
interlining products to manufacturers of fashion apparel, specialty retailers,
mass merchandisers, brand licensees and major retailers. Talon manufactures and
distributes zippers and other fasteners under its Talon(R) brand, known as the
original American zipper invented in 1893. Talon also designs, manufactures,
engineers, and distributes apparel trim products and specialty waist-bands under
its trademark names, Talon, Tag-It and TekFit, to more than 60 apparel brands
and manufacturers including Levi Strauss & Co., Juicy Couture, Ralph Lauren,
Victoria's Secret, Target Stores, Wal-Mart, and Express. The company has offices
and facilities in the United States, Hong Kong, China, India and the Dominican
Republic and is expanding into Eastern Europe, Indonesia and Vietnam.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements made in reliance upon the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are not guarantees of future performance and are
inherently subject to uncertainties and other factors which could cause actual
results to differ materially from the forward-looking statement. These
statements are based upon, among other things, assumptions made by, and
information currently available to, management, including management's own
knowledge and assessment of the company's industry, competition and capital
requirements, and the potential for growth in zipper sales. Factors which could
cause actual results to differ materially from these forward-looking statements
include our ability to manage an international expansion, the level of
acceptance of the company's products by retailers and consumers, pricing
pressures and other competitive factors and the unanticipated loss of major
customers. These and other risks are more fully described in the company's
filings with the Securities and Exchange Commission, including the Company's
most recently filed Annual Report on Form 10-K and Quarterly Report on Form
10-Q, which should be read in conjunction herewith for a further discussion of
important factors that could cause actual results to differ materially from
those in the forward-looking statements. The company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
COMPANY CONTACT INVESTOR RELATIONS
Talon International, Inc. Scott Liolios or Scott Kitcher
Rayna Long Liolios Group, Inc.
Tel (818) 444-4128 Tel (949) 574-3860
rlong@talonzippers.com
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TALON INTERNATIONAL, INC.
(FORMERLY TAG-IT PACIFIC, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Net sales ........................................... $ 9,013,135 $ 13,366,945 $ 31,670,234 $ 38,251,248
Cost of goods sold .................................. 6,486,659 9,218,539 22,422,412 27,132,880
------------ ------------ ------------ ------------
Gross profit ..................................... 2,526,476 4,148,406 9,247,822 11,118,368
Selling expenses .................................... 722,447 910,996 2,161,666 2,131,515
General and administrative expenses ................. 2,731,665 2,606,936 7,749,445 7,903,435
Reserve for impairment of note receivable ........... 2,127,653 -- 2,127,653 --
------------ ------------ ------------ ------------
Total operating expenses ......................... 5,581,765 3,517,932 12,038,764 10,034,950
Income (loss) from operations ....................... (3,055,289) 630,474 (2,790,942) 1,083,418
Interest expense, net ............................... 647,514 236,500 1,138,088 752,705
------------ ------------ ------------ ------------
Income (loss) before income taxes ................... (3,702,803) 393,974 (3,929,030) 330,713
Provision for income taxes .......................... (20,972) 54,857 57,652 66,357
------------ ------------ ------------ ------------
Net income (loss) ................................ $ (3,681,831) $ 339,117 $ (3,986,682) $ 264,356
============ ============ ============ ============
Basic income (loss) per share ....................... $ (0.18) $ 0.02 $ (0.21) 0.01
============ ============ ============ ============
Diluted income (loss) per share ..................... $ (0.18) $ 0.02 $ (0.21) $ 0.01
============ ============ ============ ============
Weighted average number of common shares outstanding:
Basic ............................................ 20,041,433 18,440,927 19,060,664 18,347,509
============ ============ ============ ============
Diluted .......................................... 20,041,433 19,279,648 19,060,664 18,719,531
============ ============ ============ ============
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TALON INTERNATIONAL, INC.
(FORMERLY TAG-IT PACIFIC, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
September December 31,
30, 2007 2006
------------ ------------
Assets
Current assets:
Cash and cash equivalents ................... $ 2,318,712 $ 2,934,673
Accounts receivable, net .................... 3,866,355 4,664,766
Note receivable, net ........................ -- 1,378,491
Inventories, net ............................ 2,710,051 3,051,220
Prepaid expenses and other current assets ... 449,743 541,034
------------ ------------
Total current assets ........................... 9,344,861 12,570,184
Property and equipment, net .................... 5,418,095 5,623,040
Fixed assets held for sale ..................... 826,904 826,904
Note receivable, less current portion .......... -- 1,420,969
Due from related party ......................... 736,557 675,137
Intangible assets, net ......................... 4,110,751 4,139,625
Other assets, net .............................. 592,971 437,569
------------ ------------
Total assets ................................... $ 21,030,139 $ 25,693,428
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ............................. $ 5,363,432 $ 4,533,145
Accrued legal costs .......................... 226,507 427,917
Other accrued expenses ....................... 2,246,344 2,832,363
Demand notes payable to related parties ...... 85,176 664,970
Current portion of capital lease obligations . 383,090 432,728
Current portion of notes payable ............. 294,259 1,107,207
Secured convertible promissory notes ......... -- 12,472,622
------------ ------------
Total current liabilities ...................... 8,598,808 22,470,952
Capital lease obligations, less current portion 247,763 474,733
Notes payable, less current portion ............ 925,104 1,061,514
Revolver note payable .......................... 3,807,806 --
Term note payable, net of discount ............. 7,289,480 --
Other long term liabilities .................... 83,651 --
------------ ------------
Total liabilities .............................. 20,952,612 24,007,199
------------ ------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock Series A, $0.001 par value;
250,000 shares authorized; no shares issued
or outstanding ............................... -- --
Common stock, $0.001 par value, 100,000,000
shares authorized; 20,041,433 shares issued
and outstanding at September 30, 2007;
18,466,433 at December 31, 2006 ............ 20,041 18,466
Additional paid-in capital ................... 54,394,342 51,792,502
Accumulated deficit .......................... (54,357,221) (50,124,739)
Accumulated other comprehensive income-foreign
currency ................................... 20,365 --
------------ ------------
Total stockholders' equity ..................... 77,527 1,686,229
------------ ------------
Total liabilities and stockholders' equity ..... $ 21,030,139 $ 25,693,428
============ ============
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