On December 7, 2007, Spy Optic, Inc. (“Spy”), a subsidiary of Orange 21 Inc. (the “Company”), entered into the First Modification to Loan and Security Agreement (the “Amendment”) with BFI Business Finance (“Lender”). The Amendment modifies the Loan and Security Agreement dated February 26, 2007, by, among other things, providing that upon Spy’s request, Lender will loan up to the lesser of (i) $8,000,000 or (ii) the Borrowing Base to Spy. The definition of “Borrowing Base” is amended to mean the sum of the following (i) 80% of the gross face amount of Spy’s eligible accounts receivable, plus (ii) 25% of the current market cost of raw materials and finished goods that constitute Spy’s eligible inventory, not to exceed (a) $1,500,000 from December 7, 2007 through February 29, 2008; (b) $1,333,333 from March 1, 2008 through March 31, 2008; (c) $1,166,667 from April 1, 2008 through April 31, 2008; and (d) $1,000,000 from May 1, 2008 and thereafter. Upon the execution of the Amendment, Spy paid a one time fee to Lender in the amount of $30,000.

The foregoing description of the Amendment is qualified in its entirety by reference to the Amendment filed as Exhibit 10.44 to this Current Report on Form 8-K.

The disclosure under Item 1.01 above is incorporated herein by reference.

(d) Exhibits

SIGNATURES

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, thereunto duly authorized.

EXHIBIT INDEX