Orange 21 Inc. designs, develops and markets premium products for the action sports and youth lifestyle markets. Its principal products, sunglasses and goggles, are marketed under the brand Spy Optic. The Company's product matrix consists of seven product categories, including fashion sunglasses, women-specific sunglasses, performance sport sunglasses, snow goggles, motocross goggles, apparel and accessories.

According to a press release dated March 24, 2005, the complaint charges Orange 21 and certain of its officers and directors with violations of the Securities Act of 1933. Orange 21 designs, develops and markets premium products for the action sports and youth lifestyle markets. Its principal products, sunglasses and goggles, are marketed under the brand Spy Optic. The complaint alleges that on December 14, 2004, Orange 21 accomplished its IPO of 3.48 million shares at $8.75 per share (including 2.48 million shares sold by Orange 21 and 1 million shares sold by No Fear, Inc.) for net proceeds of $20.2 million to Orange 21 and $8.1 million to No Fear, pursuant to the Registration Statement. The Registration Statement failed to disclose that Orange 21 was engaging in copyright infringement and that its European operations were underperforming and would have to be restructured, which costs would adversely affect 2005 results.

The complaint further alleges on or around February 17, 2005, Orange 21 announced reduced earnings expectations for 2005 due in part to changes in its European infrastructure. As a result of this news, Orange 21’s stock price collapsed to around $6.00 per share. Subsequently, on or around March 7, 2005, Orange 21 disclosed it had received a cease-and-desist letter from Oakley, Inc. In response, the Company would be required to make changes based on the alleged infringements.

Specifically, the complaint alleges the Registration Statement omitted the following: (a) the Company’s European operations were underperforming and lacked the requisite infrastructure necessary to perform consistent with defendants’ representations and expectations and that as a result the Company would need to restructure these operations and incur material costs, thereby materially adversely affecting the Company’s operating performance for 2005; (b) the Company was violating patents and trademarks associated with its key product, fashion frames, and that the Company would halt the production of certain products, including the New Meteor New Espador and 42 fashion frames; and (c) the Company was modifying its distribution policies which necessarily would increase the Company’s cost structure and erode the Company’s margins and net income by $700,000 for FY 2005.

If you bought Orange 21, Inc. securities between December 14, 2004 and December 14, 2004, inclusive, and would like to obtain information about the lawsuit, then you are invited to call (866) 467-1400 to speak with an attorney.