8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported):  November 10, 2010

TALON INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware (State or Other Jurisdiction of Incorporation)	1-13669 (Commission File Number)	95-4654481 (I.R.S. Employer Identification No.)
	21900 Burbank Blvd., Suite 270 Woodland Hills, California (Address of Principal Executive Offices)	91367 (Zip Code)

(818) 444-4100

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02                      Results of Operations and Financial Condition.

On November 10, 2010, Talon International, Inc. issued a press release regarding our financial results for the quarter and nine months ended September 30, 2010.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by this reference.

The information in this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01                      Financial Statements and Exhibits.

(a)           Financial statements of business acquired.

None.

(b)           Pro forma financial information.

None.

(c)           Shell company transactions.

None.

(d)           Exhibits.

99.1 Press Release dated November 10, 2010, published by the Registrant.*

* This exhibit is furnished, not filed.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

      Date:  November 10, 2010 TALON INTERNATIONAL, INC.     By:     /s/ Lonnie D. Schnell  Lonnie D. Schnell, Chief Executive Officer  

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EX-99.1

Exhibit 99.1

 

Talon International, Inc. Reports

Third Quarter 2010 Financial Results

LOS ANGELES, Calif. — November 10, 2010 — Talon International, Inc. (OTCBB:TALN), a leading global supplier of zippers, apparel fasteners, trim and interlining products, reported financial results for the third quarter ended September 30, 2010.

Highlights

· Zipper sales slightly lower in the third quarter than 2009 - 20% higher than 2009 for the first nine months.

· Income from operations for the first nine months of 2010 - $1.4 million; vs. $0.5 million for the same period in 2009.

· Recapitalization Agreement completed July 30, 2010 that eliminated $16.7 million in debt in exchange for Series B Convertible Preferred Stock.

Financial Results

“Although the third quarter sales results were a modest disappointment we nevertheless believe the third quarter of 2010 was a major success and a new beginning for growth and profitability.  During the quarter we saw our customers embracing cautious outlooks with regard to retail sales and consequently adopting limited inventory purchase plans for the balance of 2010,” noted Lonnie Schnell, Talon’s CEO. “Despite the softness in the quarter’s revenues we were pleased with our third quarter as we completed a milestone recapitalization of the Company’s debt that greatly enhances our future liquidity and positions the Company to generate quality net earnings in future periods.”

Talon zipper sales were $5.5 million for the quarter ended September 30, 2010, reflecting a decline of 4.9% from the same quarter in 2009.  Global economic weakness continued to drag on consumer confidence and spending, and fueled caution among retailers to avoid excess inventories.  Buying at the wholesale level suffered in the third quarter as these concerns increased.  Talon zipper sales for the nine months ended September 30, 2010 were $20.2 million, an increase of 20% over the first nine months in 2009. Trim product sales totaled $3.7 million for the quarter ended September 30, 2010 reflecting a decline of 18.7% compared to the same quarter in 2009.  For the nine months ended September 30, 2010 Trim product sales were $12.3 million, or just 2.9% below the same period in 2009.  Tot al sales for the third quarter ended September 30, 2010 totaled $9.3 million or 11.0% lower than the same period in 2009. Total sales for the nine months ended September 30, 2010 were $32.5 million, an increase of $3.0 million or 10.0% compared to the same period in 2009.

The gross profit for the quarter ended September 30, 2010 was $2.7 million or 29.3% of sales as compared to $3.0 million or 28.3% of sales for the same quarter in 2009.  The gross profit percentage improved slightly due mainly to product mix, while the total dollar value of gross profit in the quarter was slightly lower due to the overall sales decline.  For the nine months ended September 30, 2010 gross profit was $9.5 million or 29.2% of sales as compared to $8.5 million or 28.8% for the first nine months of 2009. The $1.0 million increase in gross profit was principally due to the higher year-to-date sales volumes.

Sales and marketing expenses for three months ended September 30, 2010 were $841,000 or 9.1% of sales, as compared to $616,000 or 5.9% of sales for the same period in 2009.  Sales and marketing expenses for the nine months ended September 30, 2010 were $2.3 million or 7.0% of sales as compared to $2.0 million or 6.9% of sales, for the same period in 2009.  Selling costs increased for the three and nine months ended September 30, 2010 as compared to the same period in 2009 principally due to the expansion of our sales force in the U.S. during the third quarter of 2010 offset by lower selling costs in Asia associated with the lower sales volume.

General and administrative expenses for the three months ended September 30, 2010 were $2.0 million or 21.3% of sales as compared with $2.1 million or 20.5% of sales for the same period in 2009. General and administrative expenses for the nine months ended September 30, 2010 were $5.8 million, or 17.8% of sales as compared with $6.0 million or 20.2% of sales, for the same period in 2009. The reduction includes a benefit from the sale of the related party note for $275,000.

For the quarter ended September 30, 2010 a loss from operations of $98,000 was reported as compared to income from operations of $201,000 for the same period in 2009.   For the nine months ended September 30, 2010 the income from operations was $1.4 million as compared to $498,000 for the same period in 2009.

As a result of the Recapitalization Agreement with CVC Capital, LLC completed on July 30, 2010, we reported a loss on the extinguishment of debt in the amount of $571,000 which was recorded during the third quarter and nine months ended September 30, 2010.  Interest expense for the three months ended September 30, 2010 decreased to $161,000; a decline of $523,000 as compared to the same period in 2009. Interest expense in the third quarter was principally associated with the debt to CVC that was fully extinguished at July 30, 2010.  At September 30, 2010 no borrowings or debt associated with this lender were outstanding.  Interest expense for the nine months ended September 30, 2010 decreased by $229,000, as compared to the same period in 2009, to $1.8 million. The provision for income taxes for the three and nine months ended September 30, 2010 was $412,000 and $543,000, respectively.  The provision for income taxes for the quarter and nine months includes a deferred income tax liability accrual in the amount of $568,000 due to a tax basis difference related to our intangible assets. The provision for income taxes for the three and nine months ended September 30, 2009 was $165,000 and $267,000, respectively.

The net loss for the quarter ended September 30, 2010 was $1.2 million compared to a net loss of $647,000 for the same period in 2009. For the nine months ended September 30, 2010 the Company reported a net loss of $1.4 million as compared to a net loss of $1.8 million for the same period in 2009.

The loss attributed to common stockholders for the quarter ended September 30, 2010 was $2.6 million, or $0.13 per share compared to loss of $647,000 or $0.03 per share for the same period in 2009. For the nine months ended September 30, 2010 the Company reported a loss attributed to common stockholders of $2.8 million or $0.14 per share as compared to a loss of $1.8 million or $0.09 per share for the same period in 2009.

Conference Call

Talon International will hold a conference call on Thursday, November 11, 2010, to discuss its third quarter 2010 financial results. Talon’s 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.

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Date: Thursday, November 11, 2010

Time: 4:30 pm Eastern (1:30 pm Pacific)

Domestic callers: 1-800-894-5910

International callers: 1-785-424-1052

Conference ID#: 7TALON

A replay of the call will be available later that evening and will be accessible until December 9, 2010. The replay call-in number is 1-877-870-5176 for domestic callers and 1-858-384-5517 for international. Pin number 12122.

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 major apparel brands and manufacturers including Wal-Mart, Kohl’s, J.C. Penney, Victoria’s Secret, Tom Tailor, Abercrombie and Fitch, Polo Ralph Lauren, Phillips-Van Heusen, Reebok and Juicy Couture. Talon has offices and facilities in the United States, United Kingdom, Hong Kong, China, and Bangl adesh.

Company Contact

Talon International, Inc.

Rayna Hernandez

Tel (818) 444-4128

raynah@talonzippers.com

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TALON INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Net sales	$	9,277,334		$	10,426,764		$	32,485,666		$	29,526,283
Cost of goods sold		6,563,278			7,476,061			22,995,680			21,029,966
Gross profit		2,714,056			2,950,703			9,489,986			8,496,317
Sales and marketing expenses		840,779			616,000			2,285,132			2,034,814
General and administrative expenses		1,971,458			2,133,795			5,780,968			5,963,720
Total operating expenses		2,812,237			2,749,795			8,066,100			7,998,534
Income (loss) from operations		(98,181	)		200,908			1,423,886			497,783
Interest expense, net		160,765			683,501			1,752,783			1,981,539
Loss on extinguishment of debt		570,915			-			570,915			-
Loss before provision for income taxes		(829,861	)		(482,593	)		(899,812	)		(1,483,756	)
Provision for income taxes		412,305			164,563			543,321			267,073
Net loss	$	(1,242,166	)	$	(647,156	)	$	(1,443,133	)	$	(1,750,829	)
Returns to Preferred Stockholders:
Series B Preferred Stock original issue discount		(903,172	)		-			(903,172	)		-
Series B Preferred Stock Dividends		(445,511	)		-			(445,511	)		-
Loss attributable to common stockholders	$	(2,590,849	)	$	(647,156	)	$	(2,791,816	)	$	(1,750,829	)
Loss per share:
Loss attributable to common stockholders	$	(2,590,849	)	$	(647,156	)	$	(2,791,816	)	$	(1,750,829	)
Weighted average number of common shares outstanding - Basic and diluted		20,291,433			20,291,433			20,291,433			20,291,433
Basic and diluted net loss per share	$	(0.13	)	$	(0.03	)	$	(0.14	)	$	(0.09	)

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TALON INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

	September 30, 2010			December 31, 2009
	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	2,016,648		$	2,264,606
Accounts receivable, net		2,858,307			3,021,642
Inventories, net		1,279,391			1,679,302
Prepaid expenses and other current assets		354,283			240,554
Total current assets		6,508,629			7,206,104
Property and equipment, net		1,741,761			2,280,586
Intangible assets, net		4,110,751			4,110,751
Other assets		413,962			236,386
Total assets	$	12,775,103		$	13,833,827
Liabilities, Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	4,578,047		$	46,337,368
Accrued director’s fee		399,825			426,125
Other accrued expenses		1,399,850			2,252,534
Revolver note payable		-			4,988,988
Term notes payable, net of discounts		-			9,876,114
Notes payable to related parties		272,867			265,871
Other notes and current portion of capital lease obligations		68,745			115,336
Total current liabilities		6,719,334			24,262,336
Capital lease obligations, net of current portion		19,049			23,477
Deferred income tax		568,467			-
Other liabilities		697,515			726,875
Total liabilities		8,004,365			25,012,688
Series B Convertible Preferred Stock, $0.001 par value; 407,160 shares authorized, issued and outstanding      at September 30, 2010		17,152,196			-
Stockholders’ Equity (Deficit):
Series A Preferred Stock, $0.001 par value; 250,000 shares authorized; no shares issued or outstanding		-			-
Common stock, $0.001 par value, 100,000,000 shares authorized; 20,291,433 shares issued and outstanding          at September 30, 2010 and December 31, 2009		20,291			20,291
Additional paid-in capital		56,693,948			55,070,568
Accumulated deficit		(69,135,825	)		(66,344,009	)
Accumulated other comprehensive income		40,128			74,289
Total stockholders’ equity (deficit)		(12,381,458	)		(11,178,861	)
Total liabilities, preferred stock and stockholders’ equity (deficit)	$	12,775,103		$	13,833,827

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