TLN Talon International,

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 second quarter and six months ended June 30, 2007. Sales for the three months ended June 30, 2007 were $13.6 million, reflecting a decline of approximately 4.8% from the same period of 2006. Sales for the six months ended June 30, 2007 were $22.7 million, a decline from the same period in 2006 by 8.9%. The sales decrease for both the quarter and year to date from the prior year reflects a sharp decline in waistband product sales as a result of the expiration of an exclusive sales contract in October 2006. Sales of waistband products were $0.2 million for the three months ended June 30, 2007 as compared to $2.5 million for the same period in 2006, and waistband product sales for the six months ended June 30, 2007 were $0.6 million as compared to $4.4 million for the same six month period in 2006. Sales of the waistband products are expected to be minimal for the balance of 2007 as new customer programs are developed for future production. Sales of waistband products for all of 2006 were approximately $9.5 million. Talon zipper sales for the three months ended June 30, 2007 were $8.4 million, reflecting an increase of more than 55% over the same period in 2006. Sales of Talon zippers for the six months ended June 30, 2007 were $13.2 million, for an increase of over 41% from the same six-month period in 2006. �Although our overall revenues for the periods declined slightly from the prior year, we were very pleased with the results within our zipper products, and the decline from the business transition of the waistband products was consistent with our expectations,� stated Stephen Forte, chief executive officer of Talon International. �The dramatic sales growth of our Talon zipper products and the adoption the name of the Talon brand as our corporate name reflects our core marketing strategy to capitalize on the huge opportunities we see for the Talon brand in the $7 billion international zipper market. As the numbers show, we are realizing significant favorable results as we rapidly expand into new markets and team with apparel makers who are anxious for an alterative global supplier of zipper products with a reputation for superior quality.� For the second quarter ended June 30, 2007, the company reported net income of $490,500 or $0.02 per diluted share on 20.0 million fully diluted shares, as compared to net income of $654,600 or $0.04 per diluted share on 18.6 million fully diluted shares for the same period in 2006. For the six months ended June 30, 2007 the company reported a net loss of $305,000 or $0.02 per share on 18.6 million shares outstanding, as compared to a net loss of $75,000 or $0.00 per share for the same period in 2006. The increase in the net loss for the six months ended June 30, 2007 as compared with the same period in 2006 is principally attributable to the decline in overall revenues, substantially offset by improvements in other components of gross margin and a reduction in general and administrative costs. Operating expenses for the six months ended June 30, 2007 were $6.5 million, approximately equal to the operating expenses for same period in 2006. �Our operating expenses remain under close control, and while our operating expenses from year-to-year did not reflect a net reduction, we nevertheless were able to expand our operations globally, adding substantially to our sales presence within Asia, while offsetting these strategic investments with cost reductions in the U.S. in service and administrative fees,� explained Mr. Forte. Net cash provided by operating activities for the six months ended June 30, 2007 was $1.8 million despite the year to date net loss, and unrestricted cash for the six months increased from December 31, 2006 by $887,000 to $3.8 million at June 30, 2007. Net cash of $10.5 million was also generated during the six months ended June 30, 2007 in connection with the Company�s $14.5 million credit facility, which was principally designed to retire the convertible notes scheduled to mature in November 2007. At June 30, 2007, $9.5 million of the initial proceeds of the new credit facility were held in a cash escrow account and $1.0 million was used to retire a related party note. Subsequent to June 30, 2007, an additional $3.0 million in funds were borrowed under this credit facility, and together with the escrow funds, these funds were used to pay-off in full all of the convertible promissory notes. Mr. Forte concluded, �With the completion of this debt refinancing we have put the restructuring of the company behind us and we can now look ahead and focus on introducing new products and new innovative manufacturing processes and capabilities. We believe we have reestablished our momentum, and intend to use this to increase sales, expand our margins, and develop new relationships worldwide.� Conference Call Talon International will hold a conference call later today to discuss its second 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, August 14, 2007 Time: 4:30 pm Eastern (1:30 pm Pacific) Domestic callers: 1-800-322-9079 International callers: 1-973-582-2717 Conference ID#: 9086533 Internet Simulcast: http://viavid.net/dce.aspx?sid=0000430E 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 September 28, 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 # 9086533. 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 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. TALON INTERNATIONAL, INC. (Formerly Tag-It Pacific, Inc.) Consolidated Statements of Operations (unaudited) � Three Months EndedJune 30, Six Months EndedJune 30, 2007 2006 2007 2006 � Net sales $ 13,566,981 $ 14,246,087 $ 22,657,099 $ 24,884,303 Cost of goods sold 9,484,488 10,118,850 15,827,411 � 17,914,341 � Gross profit 4,082,493 4,127,237 6,829,688 6,969,962 � Selling expenses 841,326 674,894 1,547,561 1,220,519 General and administrative expenses 2,406,192 2,557,062 5,017,780 � 5,296,499 � Total operating expenses 3,247,518 3,231,956 6,565,341 6,517,018 � Income from operations 834,975 895,281 264,347 452,944 Interest expense, net 265,858 229,139 490,574 � 516,205 � Income (loss) before income taxes 569,117 666,142 (226,227 ) � (63,261 ) Provision for income taxes 78,624 11,500 78,624 � 11,500 � Net Income (loss) $ 490,493 $ 654,642 $ (304,851 ) $ (74,761 ) � Basic income (loss) per share $ 0.03 $ 0.04 $ (0.02 ) $ (0.00 ) Diluted income (loss) per share $ 0.02 $ 0.04 $ (0.02 ) $ (0.00 ) � Weighted average number of common shares outstanding: Basic 18,590,884 18,358,360 18,562,151 � 18,300,027 � Diluted 20,058,682 18,598,442 18,562,151 � 18,300,027 � TALON INTERNATIONAL, INC. (Formerly Tag-It Pacific, Inc.) Consolidated Balance Sheets � � (unaudited) June 30, 2007 December 31, 2006 Assets Current Assets: Cash and cash equivalents $ 3,822,264 $ 2,934,673 Restricted cash 9,500,000 - Accounts receivable, net 6,040,757 4,664,766 Note receivable 1,450,051 1,378,491 Inventories, net 2,555,072 3,051,220 Recoverable legal costs 1,180,748 107,108 Prepaid expenses and other current assets 675,063 � 433,926 � Total current assets 25,223,955 12,570,184 � Property and equipment, net 5,575,712 5,623,040 Fixed assets held for sale 826,904 826,904 Note receivable, less current portion 677,601 1,420,969 Due from related party 722,918 675,137 Other intangible assets, net 4,110,751 4,139,625 Other assets 720,546 � 437,569 � Total assets $ 37,858,387 � $ 25,693,428 � � Liabilities and Stockholders� Equity Current liabilities: Accounts payable $ 6,391,504 $ 4,006,241 Accrued legal costs 1,267,167 427,917 Other accrued expenses 3,289,601 3,359,267 Demand notes payable to related parties 85,176 664,970 Current portion of capital lease obligations 395,294 432,728 Current portion of notes payable 405,878 1,107,207 Secured convertible promissory notes 12,488,490 � 12,472,622 � Total current liabilities 24,323,110 22,470,952 � Capital lease obligations, less current portion 351,292 474,733 Notes payable, less current portion 1,000,482 1,061,514 Revolver note payable 1,307,806 - Term note payable 7,106,260 - Other long term liabilities 83,651 � - � Total liabilities 34,172,601 � 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 June 30, 2007; 18,466,433 at December 31, 2006 20,041 18,466 Additional paid-in capital 54,341,135 51,792,502 Accumulated deficit (50,675,390 ) � (50,124,739 ) Total stockholders� equity 3,685,786 � 1,686,229 � Total liabilities and stockholders� equity $ 37,858,387 � $ 25,693,428 �