Orange 21 Inc. (NDAQ: ORNG) shares opened lower after Costa Brava withdrew its $3.90 per share aquisition offer. Many investors are attributing this withdrawal to the poor financing environment that may prohibit anything but an all-cash deal. In fact, Orange 21 even reported a net income of $6,000 for the quarter compared to a loss of $58,000 during the prior year quarter. Consolidated net sales declined, however, to $12 million from $13.2 million. The benefits came from lower operating expenses.

According to the Schedule 13D/A filing made with the SEC:

"On November 21, 2008, Costa Brava sent a letter to the Board of Directors of the Issuer withdrawing its proposal to acquire 100% of the outstanding equity interests of the Issuer. A copy of the letter delivered to the Issuer is filed as Exhibit B hereto and is incorporated herein by reference.

The Reporting Persons believe that the shares of Common Stock of the Issuer are undervalued and they are considering pursuing any and all of the actions enumerated below.

The Reporting Persons may take such actions with respect to their investment in the Issuer as they deem appropriate, including, without limitation: (i) having communications with the Issuer's Board of Directors and management with respect to methods for increasing stockholder value; (ii) purchasing additional shares of Common Stock in the open market or otherwise; and (iii) making a tender offer for shares of Common Stock not owned by the Reporting Persons.

The Reporting Persons may also participate in discussions with potential purchasers of their shares of Common Stock, sell some or all of their shares of Common Stock in the open market or through private negotiated transactions, or change their intent as to any and all matters referred to above.

The Reporting Persons reserve their rights to make alternative plans or proposals in the future or to take other steps to enhance the value of their investments. The Reporting Persons further reserve the right to increase, decrease or eliminate their investment in the Issuer or take any other action relative thereto."

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