SOURCE: Talon International

May 15, 2008 16:05 ET

Talon International Reports First Quarter 2008 Financial Results

Zipper Sales up 19%; Net Sales up 10% to $10 Million

LOS ANGELES, CA--(Marketwire - May 15, 2008) - Talon International, Inc. (OTCBB: TALN), a leading global supplier of zippers, apparel fasteners, trim and interlining products, reported financial results for the first quarter ended March 31, 2008.

First Quarter 2008 Highlights

--  Zipper product sales up 19% vs. Q1 2007
--  Net sales totaled $10.0 million, up 10% vs. Q1 2007
--  Net loss of $1.8 million, including severance charges of $724,000, vs.
    net loss of $795,000 in Q1 2007

First Quarter 2008 Financial Results

Net sales for the first quarter of 2008 were $10.0 million, an increase of 10% from $9.1 million in the first quarter of 2007. The increase in revenue reflects continuous improvements in the sales of Talon Zipper and Trim products. Talon Zipper sales increased $0.9 million, or 19%, to $5.6 million in the quarter, as compared to the same period a year ago. Talon Trim sales increased $0.4 million, or 10%, to $4.4 million as compared to the same period a year ago.

The increase in Talon Zipper and Trim sales were partly offset by an anticipated decline in Tekfit sales of $0.4 million from the same period in 2007. The decline in Tekfit product sales is due to the termination in October 2006 of an exclusive contract for this product.

"Our improvement in sales this quarter, which were also up 12% over the previous quarter, is in line with expectations and is the result of our expanded footprint throughout Southeast Asia and having won new nominations from major brand retailers for our Zipper and Trim products," said Lonnie Schnell, Talon's CEO. "As also anticipated, the decline in Tekfit revenue shows that the sales cycle for this product to new customers continues to be long. Overall, we continued to effectively build upon our strengths and are looking forward to sustained growth through 2008."

Gross profit for the first quarter of 2008 totaled $2.8 million or 27% of sales, as compared to $2.7 million or 30% of sales in same quarter in 2007. Gross profit attributable to the sales increase was mainly offset by higher product costs and additional charges associated with product deliveries and customer accommodations.

Said Schnell: "Product cost pressures were significant in the first quarter, as we introduced a substantial new retail brand to our zipper customer list and dealt with challenging delivery schedules. Despite the cost pressures, we believe cost reduction opportunities exist that will allow us to achieve margin improvements in the future."

Operating expenses for the first quarter were $4.1 million, as compared to $3.3 million for the same period in 2007. Operating expenses in the first quarter 2008 include $724,000 of costs associated with executive severances. Increases in employee costs generally associated with the company's growth and expansion were principally offset by reductions in legal, administrative and professional fees.

The net loss for the first quarter of 2008 also includes net interest expense of $550,000, an increase of $368,000 as compared to net interest expense for the same period in 2007 of $182,000. Approximately $166,000 of the increase represents non-cash interest charges associated with the stock and warrants issued in connection with the new debt facility entered into in June 2007 with Bluefin Capital. The remainder of the increase is attributable to the higher interest cost on the Bluefin facility as compared to the promissory notes in place during the first half of 2007.

Conference Call

Talon International will hold a conference call on Thursday, May 15, 2008, to discuss these first quarter 2008 financial results. Talon CEO Lonnie D. Schnell will host the call starting at 4:30 p.m. Eastern Time. A question and answer session will follow the 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: Thursday, May 15, 2008

Time: 4:30 p.m. Eastern (1:30 p.m. Pacific)

Domestic callers: 1-800-895-1085

International callers: 1-785-424-1055

Conference ID#: 7TALON

Internet Simulcast and replay:

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 after 7:30 p.m. Eastern Time and until June 15, 2008:

Toll-free replay number: 1-800-839-3011

International replay number: 1-402-220-7231

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® brand, known as the original American zipper invented in 1893. Talon also designs, manufactures, engineers, and distributes apparel trim products and specialty waistbands 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.

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 and other products. 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, our ability to reduce costs, 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.

                         TALON INTERNATIONAL, INC.
                   Consolidated Statements of Operations

                                              Three Months Ended March 31,
                                                  2008           2007
                                              -------------  -------------
Net sales                                     $   9,985,489  $   9,090,117

Cost of goods sold                                7,227,524      6,386,502
                                              -------------  -------------

Gross profit                                      2,757,965      2,703,615

Selling expenses                                    719,963        706,235
General and administrative expenses               3,348,236      2,611,042
                                              -------------  -------------

Total operating expenses                          4,068,199      3,317,277
                                              -------------  -------------

Loss from operations                             (1,310,234)      (613,662)

Interest expense, net                               549,514        181,682
                                              -------------  -------------
Loss before income taxes                         (1,859,748)      (795,344)

Provision (benefit) for income taxes                (21,004)             -
                                              -------------  -------------
Net loss                                      $  (1,838,744) $    (795,344)
                                              =============  =============

Basic loss per share                          $       (0.09) $       (0.04)
                                              =============  =============
Diluted loss per share                        $       (0.09) $       (0.04)
                                              =============  =============

Weighted average number of common shares
  Basic                                          20,291,433     18,533,100
                                              =============  =============
  Diluted                                        20,291,433     18,533,100
                                              =============  =============

                         TALON INTERNATIONAL, INC.
                        Consolidated Balance Sheets

                                                March 31,     December 31,
                                                  2008            2007
                                              -------------   ------------
Current Assets:
  Cash and cash equivalents                   $   1,774,819   $  2,918,858
  Marketable Securities                             380,000      1,040,000
  Accounts receivable, net                        4,939,373      3,504,351
  Inventories, net                                2,866,212      2,487,427
  Prepaid expenses and other current assets         359,587        945,566
                                              -------------   ------------
Total current assets                             10,319,991     10,896,202

Property and equipment, net                       5,039,564      5,210,446
Fixed assets held for sale                          700,000        700,000
Due from related parties                            637,255        625,454
Other intangible assets, net                      4,110,751      4,110,751
Other assets                                        545,048        551,054
                                              -------------   ------------
Total assets                                  $  21,352,609   $ 22,093,907
                                              =============   ============

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                            $   7,958,249   $  6,603,929
  Accrued legal costs                               161,757        498,846
  Other accrued expenses                          2,739,076      2,646,662
  Demand notes payable to related parties            85,176         85,176
  Current portion of capital lease
   obligations                                      290,071        323,317
  Current portion of notes payable                  281,631        299,108
                                              -------------   ------------
Total current liabilities                        11,515,960     10,457,038

Capital lease obligations, less current
 portion                                            118,227        189,705
Notes payable, less current portion                 793,007        848,484
Revolver note payable                             4,507,806      3,807,806
Term note payable, net of discount                7,393,282      7,424,573
Other long term liabilities                          83,651         83,651
                                              -------------   ------------
Total liabilities                                24,411,933     22,811,257
                                              -------------   ------------

Stockholders' Equity:
  Common stock, $0.001 par value, 100,000,000
   shares authorized; 20,291,433 shares
   issued and outstanding at March 31, 2008
   and at December 31, 2007                          20,291         20,291
  Additional paid-in capital                     54,655,511     54,510,161
  Accumulated deficit                           (57,130,990)   (55,292,246)
  Accumulated other comprehensive (loss)
   income                                          (604,136)        44,444
                                              -------------   ------------
Total stockholders' deficit                      (3,059,324)      (717,350)
                                              -------------   ------------
Total liabilities and stockholders' equity    $  21,352,609   $ 22,093,907
                                              =============   ============

Contact Information

  • Company Contact
    Talon International, Inc.
    Rayna Long
    Tel (818) 444-4128
    Email Contact

    Investor Relations
    Scott Liolios
    Scott Kitcher
    Liolios Group, Inc.
    Tel (949) 574-3860