Talon International Reports Second Quarter 2008 Financial Results

Zipper Sales Increase 37%; Net Income Increases 22%

LOS ANGELES, CA–(EMWNews – August 19, 2008) – Talon International, Inc. (OTCBB: TALN), a

leading global supplier of apparel accessories including Talon zippers,

fasteners, trim and interlining products, reported financial results for

the second quarter ended June 30, 2008.

Second Quarter 2008 Highlights

--  Talon zipper sales up 37% vs. Q2 2007

--  Net sales for the quarter $17.0 million, up 26% vs. Q2 2007

--  Net income of $0.6 million, up 22% vs. Q2 2007

    

Second Quarter 2008 Financial Results

Net sales for the second quarter of 2008 were $17.0 million, an increase of

26% from $13.6 million in the second quarter of 2007. The revenue reflects

continued growth within Southeast Asia and within new brands and program

sales of Talon Zipper and Trim products. Talon Zipper sales increased $3.1

million, or 37%, to $11.4 million in the quarter, as compared to the same

period a year ago. Talon Trim sales increased $0.6 million, or 12%, to $5.5

million as compared to the same period a year ago. Tekfit waistband sales

were as anticipated, $0.2 million less than in the same period in 2007.

Net sales for the six months ended June 30, 2008 were $27.0 million, an

increase of 19% from $22.6 million for the same period in 2007. Talon

zipper sales for the first six months of 2008 increased $4.1 million or 31%

more than in 2007. Trim product sales for the first six months of 2008 were

$9.9 million or $900,000 greater than the same period in 2007; an increase

of 10%. Tekfit product sales for the first six months of 2008 were $44,000,

a decline of $594,000 from Tekfit sales of $638,000 for the first six

months of 2007.

“Our gain in sales for the second quarter and year to date exceeded our

expectations,” said Lonnie Schnell, Talon’s CEO. “The improvement is

principally the result of new brand programs within the US and with our

sales expansion within Southeast Asia, particularly China, for our Zipper

and Trim products. The demand for a quality global supply alternative

within the zipper market is strong, and Talon represents the leading

solution for a growing number of major brand retailers. Additionally, the

refocusing of our sales force that we announced in March is beginning to

reflect the synergies we expected within all of our product lines.”

“As anticipated, Tekfit sales were lower year over year,” continued

Schnell. “However, we are beginning to see modest results from our sales

and marketing efforts over the last year, with a growing interest in, and

adoption of the technology, by new customers.”

Gross profit for the second quarter of 2008 totaled $4.9 million or 29% of

sales, as compared to $4.1 million or 30% of sales in same quarter in 2007.

Gross profit for the six months ended June 30, 2008 was $7.7 million, an

increase of $829,000 over the same period in 2007. The increase in gross

profit for the quarter and the six months was attributable to higher

overall sales volumes, partially offset by higher manufacturing costs,

increased freight and delivery charges, and customer accommodations on

deliveries.

Operating expenses for the second quarter were $3.9 million, as compared to

$3.2 million for the same period in 2007. Operating expenses for the six

months ended June 30, 2008 were $7.9 million, as compared to $6.6 million

for the same period in 2007. Cost increases for the second quarter and the

six-months were generally associated with employee costs and business

expenses in connection with the company’s growth and expansion, as well as

increases in professional and legal fees, and stock-based compensation

charges. For the first six-months of 2008, operating expenses also included

charges of $724,000 associated with the severance of former executives.

The net income for the second quarter of 2008 was $598,000 or $0.03 per

share as compared to a net income of $490,000 or $0.02 per share for the

same period in 2007. For the six-months ended June 30, 2008 the Company

reported a net loss of $1.2 million or a loss of $0.06 per share, as

compared to a net loss of $305,000, or a net loss of $0.02 per share for

the six months ended June 30, 2007.

The net income for the second quarter and net loss for the first six months

of 2008 includes net interest expense of $643,000 and $1,193,000,

respectively. The interest expense for 2008 reflects an increase of

$377,000 and $702,000, for the second quarter and six months ended June 30,

2008, respectively, as compared to net interest expense for the same

periods in 2007. The increase in interest costs is primarily associated

with the Bluefin Capital debt facility entered into in June 2007. Non-cash

charges for the second quarter and first six months of 2008 associated with

Talon stock issued in connection with the debt facility represent $308,000

and $554,000 of the interest costs in each of the periods, respectively.

Cash on hand at June 30, 2008 was $3.7 million as compared with $2.9

million at December 31, 2007. Cash provided by operating activities for the

six months ended June 30, 2008 was $1.2 million as compared to $1.7 million

in the same period in 2007.

Conference Call

Talon International will hold a conference call on Tuesday, August 19,

2008, to discuss these second quarter 2008 financial results. Talon CEO

Lonnie D. Schnell will host the call starting at 5:00 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: Tuesday, August 19, 2008

Time: 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time)

Domestic callers: 1-800-862-9098

International callers: 1-785-424-1051

Conference ID#: 7TALON

Internet Simulcast and replay: http://viavid.net/dce.aspx?sid=0000535D

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 September 19, 2008:

Toll-free replay number: 1-800-283-8486

International replay number: 1-402-220-0869

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

                                 (Unaudited)



                          Three Months Ended         Six Months Ended

                              June 30,                    June 30,

                    --------------------------  --------------------------

                         2008          2007          2008          2007

                    ------------  ------------  ------------  ------------



Net sales           $ 17,020,629  $ 13,566,981  $ 27,006,118  $ 22,657,099

Cost of goods sold    12,119,725     9,484,488    19,347,249    15,827,411

                    ------------  ------------  ------------  ------------

  Gross profit         4,900,904     4,082,493     7,658,869     6,829,688



Selling expenses         767,865       841,326     1,487,828     1,547,561

General and

 administrative

 expenses              3,082,164     2,406,192     6,430,400     5,017,780

                    ------------  ------------  ------------  ------------

  Total operating

   expenses            3,850,029     3,247,518     7,918,228     6,565,341



Income (loss) from

 operations            1,050,875       834,975      (259,359)      264,347

Interest expense, net    643,130       265,858     1,192,644       490,574

                    ------------  ------------  ------------  ------------

Income (loss) before

 provision for

 income taxes            407,745       569,117    (1,452,003)     (226,227)

Provision for

 (benefit from)

  income taxes          (190,412)       78,624      (211,416)       78,624

                    ------------  ------------  ------------  ------------

  Net Income (loss) $    598,157  $    490,493  $ (1,240,587) $   (304,851)

                    ============  ============  ============  ============

Basic income (loss)

 per share          $       0.03  $       0.03  $      (0.06) $      (0.02)

                    ============  ============  ============  ============

Diluted income

 (loss) per share   $       0.03  $       0.02  $      (0.06) $      (0.02)

                    ============  ============  ============  ============



Weighted average

 number of common

 shares outstanding:

  Basic               20,291,433    18,590,884    20,291,433    18,562,151

                    ============  ============  ============  ============

  Diluted             20,291,433    20,058,682    20,291,433    18,562,151

                    ============  ============  ============  ============







                          TALON INTERNATIONAL, INC.

                         Consolidated Balance Sheets



                                              June 30, 2008   December 31,

                                               (Unaudited)        2007

                                              ------------    ------------

Assets

Current Assets:

  Cash and cash equivalents                   $  3,741,404    $  2,918,858

  Marketable securities available

   for sale                                        540,000       1,040,000

  Accounts receivable, net                       7,077,382       3,504,351

  Inventories, net                               2,673,647       2,487,427

  Prepaid expenses and other

   current assets                                  790,749         945,566

                                              ------------    ------------

Total current assets                            14,823,182      10,896,202



Property and equipment, net                      4,809,710       5,210,446

Fixed assets held for sale                         687,955         700,000

Due from related parties                           649,278         625,454

Other intangible assets, net                     4,110,751       4,110,751

Other assets                                       190,795         140,782

                                              ------------    ------------

Total assets                                  $ 25,271,671    $ 21,683,635

                                              ============    ============



Liabilities and Stockholders' Equity

Current liabilities:

  Accounts payable                            $ 11,297,188    $  6,603,929

  Accrued legal costs                              237,665         498,846

  Other accrued expenses                         2,841,258       2,646,662

  Demand notes payable to

   related parties                                  85,176          85,176

  Current portion of capital

   lease obligations                               282,796         323,317

  Current portion of notes payable                 263,869         299,108

                                              ------------    ------------

Total current liabilities                       15,007,952      10,457,038



Capital lease obligations,

 less current portion                               50,069         189,705

Notes payable, less current portion                736,613         848,484

Revolver note payable                            4,160,710       3,807,806

Term notes payable, net of discounts

 of $2,933,300 and $2,485,700                    7,441,705       7,014,301

Other long term liabilities                         83,651          83,651

                                              ------------    ------------

Total liabilities                               27,480,700      22,400,985

                                              ------------    ------------





Stockholders' Equity (Deficit):

  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;

   20,291,433 shares issued and outstanding

   at June 30, 2008 and December 31, 2007           20,291          20,291

  Additional paid-in capital                    54,646,042      54,510,161

  Accumulated deficit                          (56,532,833)    (55,292,246)

  Accumulated other comprehensive

  income (loss)                                   (342,529)         44,444

                                              ------------    ------------

Total stockholders' equity (deficit)            (2,209,029)       (717,350)

                                              ------------    ------------

Total liabilities and stockholders' equity    $ 25,271,671    $ 21,683,635

                                              ============    ============