10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_____________

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2015

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission file number 1-13669

TALON INTERNATIONAL, INC.

(Exact Name of Issuer as Specified in its Charter)

Delaware	95-4654481
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

21900 Burbank Boulevard, Suite 270

Woodland Hills, California 91367

(Address of Principal Executive Offices)

`

(818) 444-4100
(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. Yes [X]   No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ]  Non-accelerated filer (do not check if smaller reporting company) [ ]  Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

At November 11, 2015, the issuer had 92,267,831 shares of Common Stock, $.001 par value, issued and outstanding.

TALON INTERNATIONAL, INC.

INDEX TO FORM 10-Q

PART I	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements.	3
Consolidated Balance Sheets as of September 30, 2015 (Unaudited)  and December 31, 2014		3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2015 and 2014 (Unaudited)		4
Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2015 and 2014 (Unaudited)		5
Notes to Consolidated Financial Statements (Unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4.	Controls and Procedures	36
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 6.	Exhibits	37

2

TALON INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

	September 30, 2015			December 31, 2014
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,565,626		$	2,603,138
Accounts receivable, net		3,449,269			3,019,749
Inventories, net		563,728			506,272
Current deferred income tax assets, net		894,282			746,370
Prepaid expenses and other current assets		581,563			551,775
Total current assets		8,054,468			7,427,304
Property and equipment, net		747,420			584,586
Intangible assets, net		4,313,169			4,300,084
Deferred income tax assets, net		5,248,912			5,374,468
Other assets		415,717			416,035
Total assets	$	18,779,686		$	18,102,477
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,275,647		$	6,191,954
Accrued severance payments		704,588			-
Other accrued expenses		2,473,231			2,403,563
Revolving credit loan		1,600,000			1,500,000
Current portion of revolving term loan from related party		83,333			-
Current portion of term loan payable		-			1,816,667
Current portion of capital lease obligations		21,509			-
Total current liabilities		11,158,308			11,912,184
Revolving term loan from related party, net of discounts and current portion		1,805,218			-
Term loan payable, net of current portion		-			1,016,667
Capital lease obligations, net of current portion		66,433			-
Deferred income tax liabilities		7,318			13,961
Other liabilities		207,080			26,077
Total liabilities		13,244,357			12,968,889
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Common Stock, $0.001 par value, 300,000,000 shares authorized; 92,267,831 shares issued and outstanding at September 30, 2015 and December 31, 2014		92,268			92,268
Additional paid-in capital		64,387,694			64,175,254
Accumulated deficit		(59,051,178	)		(59,250,109	)
Accumulated other comprehensive income		106,545			116,175
Total stockholders’ equity		5,535,329			5,133,588
Total liabilities and stockholders’ equity	$	18,779,686		$	18,102,477

See accompanying notes to consolidated financial statements.

3

TALON INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net sales	$	9,992,091		$	11,749,970		$	36,587,791		$	39,052,257
Cost of goods sold		6,618,550			8,031,238			24,617,384			26,193,109
Gross profit		3,373,541			3,718,732			11,970,407			12,859,148
Sales and marketing expenses		1,494,693			1,636,759			4,778,754			4,754,723
General and administrative expenses		1,715,617			1,766,851			6,401,400			6,165,544
Total operating expenses		3,210,310			3,403,610			11,180,154			10,920,267
Income from operations		163,231			315,122			790,253			1,938,881
Interest expense, net		127,966			96,871			328,527			317,756
Loss on extinguishment of debt		134,049			-			134,049			-
Income (loss) before provision for income taxes		(98,784	)		218,251			327,677			1,621,125
Provision for (benefit from) income taxes, net		(8,431	)		161,165			128,746			732,299
Net income (loss)	$	(90,353	)	$	57,086		$	198,931		$	888,826
Basic and diluted net income (loss) per share	$	(0.00	)	$	0.00		$	0.00		$	0.01
Weighted average number of common shares outstanding - Basic		92,267,831			92,267,831			92,267,831			92,115,167
Weighted average number of common shares outstanding - Diluted		92,267,831			94,431,171			93,519,892			94,411,036
Net income (loss)	$	(90,353	)	$	57,086		$	198,931		$	888,826
Other comprehensive income (loss) from foreign currency translation		(10,220	)		(1,141	)		(9,630	)		716
Total comprehensive income (loss)	$	(100,573	)	$	55,945		$	189,301		$	889,542

 See accompanying notes to consolidated financial statements.

4

TALON INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income	$	198,931		$	888,826
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		189,309			207,195
Loss on extinguishment of debt		134,049			-
Loss (gain) on disposal of property and equipment		281			(2,130	)
Amortization of deferred financing cost and debt discounts		109,117			67,708
Stock based compensation		92,808			181,410
Deferred income taxes (benefits), net		(29,590	)		321,867
Bad debt recoveries, net		(7,370	)		(4,720	)
Inventory valuation provisions, net		10,882			9,436
Changes in operating assets and liabilities:
Accounts receivable		(446,813	)		42,178
Inventories		(69,326	)		215,452
Prepaid expenses and other current assets		(32,923	)		(4,592	)
Other assets.		(97,293	)		(16,727	)
Accounts payable and accrued expenses		943,966			(541,082	)
Other liabilities		47,670			(9,377	)
Net cash provided by operating activities		1,043,698			1,355,444
Cash flows from investing activities:
Proceeds from sale of equipment		350			2,783
Acquisitions of property and equipment		(121,393	)		(148,989	)
Acquisitions of intangibles		(22,898	)		(40,037	)
Net cash used in investing activities		(143,941	)		(186,243	)
Cash flows from financing activities:
Revolving term loan from related party borrowings		2,000,000			-
Payments of term loan payable		(2,833,334	)		(1,250,000	)
Revolving credit loan borrowings		700,000			500,000
Payment of revolving credit loan		(600,000	)		(500,000	)
Payment of financing costs associated with credit facilities		(138,715	)		-
Payment of capital leases		(6,799	)		-
Payments related to taxes on the exercise of stock options and settlement of RSUs		-			(143,537	)
Proceeds from exercise of stock options		-			29,709
Net cash used in financing activities		(878,848	)		(1,363,828	)
Net effect of foreign currency exchange translation on cash		(58,421	)		(4,377	)
Net decrease in cash and cash equivalents		(37,512	)		(199,004	)
Cash and cash equivalents at beginning of period		2,603,138			3,779,508
Cash and cash equivalents at end of period	$	2,565,626		$	3,580,504

See accompanying notes to consolidated financial statements.

5

 TALON INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Supplemental disclosures of cash flow information:
	Nine Months Ended September 30,
	2015			2014
Cash received (paid) during the period for:
Interest paid	$	(203,919	)	$	(253,124	)
Interest received	$	1,998		$	2,867
Income tax paid (refunded), net (principally foreign)	$	9,858		$	(70,316	)
Non-cash financing activities:
Warrants issued to related party	$	119,632		$	-
Lease incentives	$	133,333		$	-
Capital lease obligation	$	94,741		$	-
Non-cash exercise of stock options and settlement of RSUs in common stock	$	-		$	649
Effect of foreign currency translation on net assets	$	(9,630	)	$	716

See accompanying notes to consolidated financial statements.

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Note 1.     Presentation of Interim Information

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information and footnote disclosures normally included in comprehensive financial statements have been condensed or omitted pursuant to such rules and regulations, although the management of Talon International, Inc. and its consolidated subsidiaries (collectively, the “Company”) believes that the disclosures made are adequate to make the information not misleading. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. 

Note 2.     Summary of Significant Accounting Policies

A complete description of the Company’s Significant Accounting Policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and should be read in conjunction with these unaudited consolidated financial statements. The Significant Accounting Policies noted below are only those policies that have changed materially or have supplemental information included for the periods presented here.

Allowance for Accounts Receivable Doubtful Accounts

The Company is required to make judgments as to the collectibility of accounts receivable based on established aging policy, historical experience and future expectations. The allowances for doubtful accounts represent allowances for customer trade accounts that are estimated to be partially or entirely uncollectible. These allowances are used to reduce gross trade receivables to their net realizable value. The Company records these allowances based on estimates related to the following factors: (i) customer specific allowances; (ii) amounts based upon an aging schedule; and (iii) an estimated amount, based on the Company’s historical experience, for issues not yet identified. Bad debt expense (recoveries), net for the three and nine months ended September 30, 2015 were $7,487 and $(7,370), respectively. Bad debt expense (recoveries), net for the three and nine months ended September 30, 2014 were $4,374 and $(4,720), respectively.

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Includes other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

7

The Company’s financial instruments include cash and cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses, revolving credit loan, revolving term loan from related party, net of discounts, term loan payable, capital lease obligations and other liabilities. The book value of the financial instruments is representative of their fair values. In accordance with this guidance, the Company measures its cash equivalents at fair value. The Company’s cash equivalents are classified within Level 1. Cash equivalents are valued primarily using quoted market prices utilizing market observable inputs. At September 30, 2015 and December 31, 2014, cash equivalents consisted of money market funds measured at fair value on a recurring basis; fair value of the Company’s money market funds was approximately $791,000 and $1,018,000, respectively.

Intangible Assets

Intangible assets consist of the Talon trade name acquired in a purchase business combination, patents, licenses, intellectual property rights and technology. Intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of ASC 350, “Intangibles - Goodwill and Other”. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives using the straight-line method, and are reviewed for impairment in accordance with the provisions of ASC 360, “Property, Plant and Equipment”. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.

The Company applies Accounting Standards Update (“ASU”) 2012-02, “Intangibles – Goodwill and Other - Testing Indefinite-lived Intangible Assets for Impairment” to determine whether an impairment is required.  The guidance gives companies the option to first perform a qualitative assessment to determine whether it is more likely than not, defined as a likelihood of more than 50%, that an indefinite-lived intangible asset is impaired.  If it is determined that it is more likely than not that an impairment exists, then the company is required to estimate the fair value of the indefinite-lived intangible assets and perform a quantitative impairment test in accordance with ASC 350-30. The Company completed the required assessment as of September 30, 2015 and December 31, 2014, and noted no impairment.

From time to time the Company makes investments in product and technical opportunities that are complimentary to or enhancements to its apparel accessories business.  During the three and nine months ended September 30, 2015, the Company invested $2,460 and $22,898, respectively in the acquisition of intellectual property rights complimentary to the Company’s Talon Zipper products. During the three and nine months ended September 30, 2014, the Company invested $37,737 and $40,037, respectively in the acquisition of intellectual property rights complimentary to the Company’s Talon Zipper products.. As of September 30, 2015 and December 31, 2014 the Company had accumulated investments of $68,955 and $46,057, respectively, for intellectual property rights complimentary to the Company’s Talon Zipper products, which were not yet in service.

8

Intangible assets as of September 30, 2015 and December 31, 2014 are as follows:

	September 30,			December 31,
	2015			2014
Tradename - Talon trademark	$	4,110,751		$	4,110,751
Intellectual property rights		247,677			224,779
Less: Accumulated amortization (10 to 17 years)		(45,259	)		(35,446	)
Intellectual property rights, net		202,418			189,333
Intangible assets, net	$	4,313,169		$	4,300,084

Amortization expense for intangible assets was $3,271 and $9,813, respectively for the three and nine months ended September 30, 2015 and 2014.

Classification of Expenses

Costs of Goods Sold – Cost of goods sold primarily includes expenses related to inventory purchases, customs, duty, freight, overhead expenses and reserves for obsolete inventory. Overhead expenses primarily consist of quality assurance costs, warehouse and operations salaries, and other warehouse expense.

Sales and Marketing Expenses – Sales and marketing expenses primarily include sales salaries and commissions, travel and entertainment, marketing, advertising and other sales and product development related costs. Marketing and advertising efforts are expensed as incurred.

General and Administrative Expenses – General and administrative expenses primarily include administrative salaries, employee benefits, professional service fees, facility expenses, information technology costs, investor relations, travel and entertainment, depreciation and amortization, bad debts and other general corporate expenses.

Interest Expense, net – Interest expense reflects the cost of borrowings, amortization of deferred financing costs and amortization of debt discounts. Interest expense for the three and nine months ended September 30, 2015 totaled $128,988 and $330,525, respectively. Interest expense for the three and nine months ended September 30, 2014 totaled $98,402 and $320,623, respectively. Interest income consists of earnings from cash held in interest bearing accounts. Interest income for the three and nine months ended September 30, 2015 totaled $1,022 and $1,998, respectively. Interest income for the three and nine months ended September 30, 2014 totaled $1,531 and $2,867, respectively.

Foreign Currency Translation

The Company has operations and holds assets in various foreign countries. The local currency is the functional currency for the Company’s subsidiaries in China and India. Assets and liabilities are translated at end-of-period exchange rates while revenues and expenses are translated at the average exchange rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss) until the translation adjustments are realized. Included in accumulated other comprehensive income was a cumulative foreign currency translation gain of $106,545 and $116,175 as of September 30, 2015 and December 31, 2014, respectively.

9

Comprehensive Income (loss)

Comprehensive income (loss) consists of net income (loss) and unrealized income (loss) on foreign currency translation adjustments. The foreign currency translation adjustment represents the net currency translation gains and losses related to our China and India subsidiaries, which have not been reflected in the net income for the periods presented.

The Company reports comprehensive income (loss) in accordance with Topic 220 “Comprehensive Income”, and uses the option provided under ASU 2011-05 “Presentation of Comprehensive Income” to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year.  The accounting estimates that require the Company’s most significant, difficult and subjective judgments include the valuation allowance for accounts receivable and inventory, the assessment of recoverability of long-lived assets and intangible assets, stock-based compensation and the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions). Actual results could differ materially from the Company’s estimates.

Presentation

In order to facilitate the comparison of financial information, certain amounts reported in the prior year have been reclassified to conform to the current year presentation.

Note 3.     New Accounting Pronouncements

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, to reduce the complexity in accounting for inventory. This ASU requires entities to measure inventory at the lower of cost or net realizable value, replacing the market value approach that required floor and ceiling considerations.  This guidance for public entities is effective for fiscal years beginning after December 15, 2016, with early adoption permitted.  We are in the process of evaluating the adoption of this ASU, but do not expect this to have a material effect on our financial position, results of operations or cash flows. 

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). The amendment simplifies debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction of the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendment. ASU 2015-03 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning December 15, 2015. Other than reclassification of debt issuance costs net of amortization from assets to liabilities, no other effect is expected to be included on the Company’s financial statements.

10

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The effective date for the ASU 2014-09 is deferred by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” to annual reporting periods beginning after December 15, 2018. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new standard will replace most existing revenue recognition guidance in U.S. GAAP. The standard permits the use of either the retrospective or cumulative effect transition method. The Company does not expect that the adoption of this pronouncement will have a material impact on its Consolidated Financial Statements.

Note 4. Net Income (Loss) Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted net income (loss) per share computations:

	Net income (loss)			Shares		Per Share Amount
Three months ended September 30, 2015:
Basic net loss -
Net loss	$	(90,353	)		92,267,831	$	(0.00	)
Effect of Dilutive Securities -
Options and warrants		-			-		-
Diluted net loss	$	(90,353	)		92,267,831	$	(0.00	)
Three months ended September 30, 2014:
Basic net income -
Net income	$	57,086			92,267,831	$	0.00
Effect of Dilutive Securities -
Options		-			2,163,340		0.00
Diluted net income	$	57,086			94,431,171	$	0.00

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	Net income		Shares		Per Share Amount
Nine months ended September 30, 2015:
Basic net income -
Net income	$	198,931		92,267,831	$	0.00
Effect of Dilutive Securities -
Options and warrants		-		1,252,061		0.00
Diluted net income	$	198,931		93,519,892	$	0.00
Nine months ended September 30, 2014:
Basic net income -
Net income	$	888,826		92,115,167	$	0.01
Effect of Dilutive Securities -
Options		-		2,295,869		0.00
Diluted net income	$	888,826		94,411,036	$	0.01

For the three months ended September 30, 2015, options to purchase 8,485,287 shares of common stock exercisable between $0.04 and $1.33 per share and warrants to purchase 1,000,000 shares of common stock exercisable at $0.18 per share, were outstanding but were not included in the computation of diluted net loss per share because they would have an antidilutive effect on the net loss per share.

For the nine months ended September 30, 2015, options to purchase 2,691,667 shares of common stock exercisable between $0.04 and $0.11 per share were included in the computation of diluted net income per share, while options to purchase 5,793,600 shares of common stock exercisable between $0.11 and $1.33 per share and warrants to purchase 1,000,000 shares of common stock exercisable at $0.18 per share, were outstanding but were not included in the computation of diluted net income per share because they would have an antidilutive effect on the net income per share.

For the three and nine months ended September 30, 2014, options to purchase 5,066,667 shares of common stock exercisable between $0.04 and $0.20 per share were included in the computation of diluted net income per share. For the three and nine months ended September 30, 2014, options to purchase 4,683,600 shares of common stock exercisable between $0.21 and $5.23 per share, were outstanding but were not included in the computation of diluted net income per share because they would have an antidilutive effect on the net income per share.

Note 5.     Accounts Receivable

Accounts receivable are included on the consolidated balance sheets net of the allowance for doubtful accounts. The allowance for doubtful accounts at September 30, 2015 and December 31, 2014 was $39,981 and $50,563, respectively.

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Note 6. Inventories

Inventories are stated at the lower of cost, determined using the first-in, first-out basis, or market value and are all categorized as finished goods. The costs of inventory include the purchase price, inbound freight and duties, conversion costs and certain allocated production overhead costs. Inventory valuation reserves are recorded for damaged, obsolete, excess and slow-moving inventory. The Company uses estimates to record these reserves. Slow-moving inventory is reviewed by category and may be partially or fully reserved depending on the type of product and the length of time the product has been included in inventory. Reserve adjustments are made for the difference between the cost of the inventory and the estimated market value, if lower, and charged to operations in the period in which the facts that give rise to these adjustments become known. Market value of inventory is estimated based on the impact of market trends, an evaluation of economic conditions and the value of current orders relating to the future sales of this inventory.

Inventories consist of the following:

	September 30,			December 31,
	2015			2014
Finished goods	$	628,850		$	705,368
Less: Reserves		(65,122	)		(199,096	)
Total inventories	$	563,728		$	506,272

Note 7.     Credit Facilities and Related Party Transactions

Union Bank Credit Facilities

On December 31, 2013, the Company entered into a Commercial Credit Agreement (the “Credit Agreement”) with MUFG Union Bank, N.A. (formerly Union Bank, N.A., “Union Bank”). The Credit Agreement initially provided for a 24 month revolving loan commitment and a 36 month term loan. While the revolving loan commitment with Union Bank remains available through December 31, 2015, the term loan was extinguished during the quarter ended September 30, 2015 using proceeds from related party borrowings (See Revolving Term Loan from related party).

The revolving loan commitment includes available borrowings of up to $3,500,000 (the “Revolving Credit Loan”), consisting of revolving loans and a sublimit of letters of credit not to exceed a maximum aggregate principal amount of $1,000,000. Borrowings under the Revolving Credit Loan initially carried interest at a per annum rate of two and one-half percent (2.50%) in excess of a reference rate (“Reference Rate”), which is an index rate determined by Union Bank from time to time as a means of pricing certain extensions of credit. The Reference Rate was 3.25% as of September 30, 2015 and December 31, 2014.

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The Credit Agreement initially provided for a term loan in the amount of $5,000,000 (the “Term Loan Payable” and together with the Revolving Credit Loan, the “Union Bank Credit Facilities”). The Term Loan Payable was originally payable in 36 monthly payments of $138,889 beginning January 31, 2014 with interest payable at a per annum rate of two and three-quarters percent (2.75%) in excess of the Reference Rate. The Company paid $250,000 in financing costs associated with the Credit Agreement and used all of the proceeds of the Term Loan and $827,490 of the proceeds of the Revolving Credit Loan to repay in full at December 31, 2013, a promissory note entered into in July 2013 with CVC California, LLC in the principal amount of $5,800,000 plus accrued interest. The Credit Agreement contains representations and warranties, affirmative, negative and events of default, applicable to the Company and its subsidiaries which are customary for Union Bank Credit Facilities of this type. The Credit Agreement initially contained financial covenants applicable to the Company and its subsidiaries including maintaining a Fixed Charge Coverage Ratio between Adjusted EBITDA and principal and interest payments (as defined in the Credit Agreement) of not less than 1.25:1.00 as of the close of each fiscal quarter and an EBITDA (as defined in the Credit Agreement) of at least $2,750,000 as of the close of each fiscal quarter, for the 12-month period ended as of the last day of the quarter. The Company did not satisfy the previous minimum Fixed Charge Coverage Ratio requirement (1.25:1.00) and the previous minimum EBITDA requirement of $2,750,000 for the 12-month periods ended September 30, 2014 and December 31, 2014, and in connection therewith obtained waivers of such non-compliance from Union Bank for those periods. In exchange for the waivers, the Company paid Union Bank a waiver fee of $10,000, and at December 31, 2014 a prepayment in the amount of $500,000 was made and applied to the principal of the Term Loan Payable and certain provisions of the Credit Agreement were amended.

On March 3, 2015, the Credit Agreement was further amended to change various contractual terms as follows: the Fixed Charge Coverage Ratio requirement was reduced for the periods ended March 31, 2015 to 0.70:1.00 and for June 30, 2015 to 1.00:1.00; the minimum EBITDA requirement for the 12-month period ended as of the last day of each of these quarters during 2015 was reduced from $2,750,000 to $1,750,000; the requirement of no incurrence of a net loss after taxes for more than two consecutive fiscal quarters was changed to be effective January 1, 2015; net principal repayments totaling $600,000 in 2015 were added to the Term Loan Payable scheduled payments ($400,000 were paid during the second quarter of 2015 and the remaining $200,000 were paid during the third quarter of 2015), and excluded from the Fixed Charge Coverage Ratio calculation; the interest rate on the Term Loan Payable and Revolving Credit Loan was increased by 1% effective March 1, 2015; and the Company paid a loan modification fee of $50,000, half of which was paid on March 31, 2015 and the other half was paid on June 30, 2015. Additional legal fees were charged by Union Bank during the first quarter of 2015 in the amount of $6,915. The Company did not satisfy the minimum EBITDA requirement for the 12-month period ended June 30, 2015, due primarily to a $715,000 one-time accrual for severance payments to Lonnie D. Schnell, the Company’s former CEO and board member, that was recognized upon separation during the three months ended June 30, 2015. On August 4, 2015, the Company obtained a waiver from Union Bank of this minimum EBITDA requirement non-compliance and paid Union Bank a waiver fee of $25,000 as a condition to the waiver.

The payment and performance of all indebtedness and other obligations under the Union Bank Credit Facilities are secured by liens on substantially all of the Company assets pursuant to the terms and conditions of security agreements and guaranties executed by the Company and its principle operating subsidiaries including Talon Technologies, Inc. (U.S. operation) and Tag-It Pacific Limited (Hong Kong operation).

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On August 10, 2015, the Company entered into an amendment to the Credit Agreement with Union Bank, which provided for the elimination of financial covenants for the remaining term of the Credit Agreement, permitted the Company to incur $3,000,000 of subordinated indebtedness, and required the repayment of the outstanding Term Loan Payable in the principal amount of $1,440,278 plus accrued and unpaid interest by August 31, 2015. In connection with the amendment, the Company incurred approximately $18,000 in legal fees, representing additional financing costs to the Union Bank Credit Facilities. On August 11, 2015, the Company received an advance from Princess Investment Holdings Inc. (“Princess Investment”) (which is a related company of Kutula Holdings, a major stockholder and related party to our Company), and on August 12, 2015 we paid off the outstanding Term Loan Payable from Union Bank as well as the unpaid interest.

The Company has accounted for the payment in full of the Term Loan Payable as a debt extinguishment in accordance with FASB ASC No. 405 “Liabilities” and FASB ASC No. 470-50 “Debt, Modifications and Extinguishments”, resulting in a loss on extinguishment of debt of $134,049 included as non-operating expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2015. The loss on extinguishment was equal to the difference between the funded amount and the fair value of the debt extinguished at the transaction date.

The Company had outstanding borrowings as of September 30, 2015 and December 31, 2014 of $1,600,000 and $4,333,334, respectively, under the Union Bank Credit Facilities, of which $1,600,000 and $1,500,000, respectively, relates to obligations under the Revolving Credit Loan and at December 31, 2014 the remainder relates to the Term Loan Payable. During the nine months ended September 30, 2015, the Company obtained advances under the Revolving Credit Loan of $700,000, with no borrowings during the three months ended September 30, 2015, and repayments of $600,000 during the three and nine months ended September 30, 2015, resulting in a net increase in the outstanding borrowings to $1,600,000 at September 30, 2015.  Approximately $331,000 remained in available borrowings under the Revolving Credit Loan as of September 30, 2015.

The Revolving Term Loan commitment with Union Bank will terminate on December 31, 2015 and the Company intends to refinance its loan with Union Bank by such date using proceeds from an alternate financing source.

Revolving Term Loan from Related Party

On August 10, 2015, the Company entered into a loan and reimbursement agreement (“Loan Agreement”) with Princess Investment (which is a related company of Kutula Holdings, a major stockholder and related party to our Company), pursuant to which Princess Investment agreed to make available to the Company a loan of up to $3,000,000 (“Revolving Term Loan”). Advances under the Loan Agreement will accrue interest on the unpaid principal balance at an annual rate of 12.5%. Accrued interest on the Revolving Term Loan is payable monthly beginning September 1, 2015, and the principal amount is payable in monthly installments beginning September 1, 2016 and continuing through the maturity date of August 10, 2018.

On August 11, 2015, the Company received an advance from Princess Investment under the Loan Agreement in the amount of $1,500,000, of which $1,440,278 was used to pay off the Term Loan Payable to Union Bank on August 12, 2015. The Company borrowed an additional $500,000 during the three months ended September 30, 2015, and had an outstanding balance of $2,000,000 under the Revolving Term Loan from Princess Investment at September 30, 2015 (reflecting a balance of $1,888,551 net of debt discounts). Approximately $1,000,000 remained in available borrowings under the Revolving Term Loan as of September 30, 2015.

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The payment and performance of all our indebtedness and other obligations to Princess Investment, including all borrowings under the Loan Agreement, are guaranteed by the Company’s subsidiaries Talon Technologies, Inc. and Tag-It Pacific Limited pursuant to a Guaranty Agreement. The payment and performance of all of our indebtedness and other obligations to Princess Investment under the Loan Agreement and related agreements are secured by liens on substantially all of the assets of the Company and its subsidiary guarantors pursuant to the terms and conditions of a Pledge and Security Agreement executed by the Company and guarantors in favor of Princess Investment.

Total interest related to the Revolving Term Loan for the three and nine months ended September 30, 2015 amounted to $27,397. Total financing costs related to the Revolving Term Loan during the three and nine months ended September 30, 2015 amounted to $99,011, of which $60,000 will be paid upon maturity. The financing costs are being amortized over the three year term of the Loan.

Pursuant to the Loan Agreement, the Company issued Princess Investment warrants to purchase 1,000,000 shares of the Company’s common stock. The warrants are exercisable immediately upon issuance for a five-year period at an exercise price of $0.18 per share on a cashless basis. After consideration of FASB ASC 480 “Distinguishing Liability and Equity” and ASC 815 “Derivatives and Hedging”, the Company concluded that the warrants should be recorded as an equity instrument. The fair value of the warrants of $130,000 issued with this debt facility was valued using the Black-Scholes model, and the portion of the warrants and the Revolving Term Note were allocated using the relative fair value method in accordance with ASC 470-20-25-2. As a result, the allocated amount for the warrants amounted to $119,632 and were recorded as additional paid in capital, and reflected as a debt discount to the face value of the Revolving Term Note. The discount is being amortized over the term of the Loan and recognized as additional interest cost as amortized.

Interest expense, net, included on the Company’s Consolidated Statements of Operations and Comprehensive Income is comprised as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
Revolving credit loan	$	35,841	$	14,695		$	96,543	$	45,441
Revolving term loan from related party		27,397		-			27,397		-
Term loan payable		12,257		60,743			93,280		201,831
Amortization of deferred financing cost		43,021		22,569			100,935		67,708
Amortization of debt discounts		8,183		-			8,183		-
Total Credit Facilities related interest expense		126,699		98,007			326,338		314,980
Other interest expense, net		1,267		(1,136	)		2,189		2,776
Interest expense , net	$	127,966	$	96,871		$	328,527	$	317,756

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Note 8.     Stockholders’ Equity

Private Placement of Common Stock

In July 2013 the Company raised $5,500,000 of new equity through the sale, in a private placement transaction, of 61,111,109 shares of the Company’s common stock at a price of $0.09 per share. Zipper Holdings, LLC, a related party company controlled by Mark Dyne, the Chairman of the Company’s Board of Directors, acquired 8,333,333 shares of common stock in the private placement.

In connection with the private placement, the Company entered into a series of Subscription Agreements (the “Subscription Agreements”) and a Registration Rights Agreement (the “Registration Rights Agreement“) with the investors in the transaction. The Subscription Agreement entered into with Kutula Holdings Ltd. (“Kutula”) grants Kutula the right to nominate one member of the Company’s Board of Directors, so long as Kutula continues to hold at least 15,500,000 of the shares (as adjusted for stock splits and the like) purchased pursuant to its Subscription Agreement, subject to certain disclosure requirements and other limitations. The Registration Rights Agreement provides for demand registration rights, such that upon the demand of holders of at least 25% of the shares issued in the private placement and subject to certain conditions, the Company will then file a registration statement covering the shares issued in the private placement that requested to be included in such registration. The Registration Rights Agreement also provides certain piggyback rights, in which the holders of shares acquired in the private placement have the right to include those shares in a Company-initiated registration.

Pursuant to its obligations under the Registration Rights Agreement, the Company filed a registration statement on Form S-1 with the SEC on November 20, 2014 to register for resale all of the 61,111,109 shares issued in the private placement.  The registration statement was declared effective on December 4, 2014. 

Authorized Common Stock and Preferred Stock

On November 8, 2013, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to increase the number of shares of common stock authorized to be issued from 100,000,000 to 300,000,000. At the Company’s 2015 Annual Meeting of Stockholders, the stockholders approved an amendment to the Company’s Certificate of Incorporation to allow for a reverse split of the Company’s outstanding shares of common stock any time prior to the 2016 Annual Meeting authorizing the Board of Directors, when and if the Board of Directors determine that such action is appropriate.

The Company’s Certificate of Incorporation presently authorizes the issuance of 3,000,000 shares of Preferred Stock, having a par value of $0.001 per share. No shares of Preferred Stock were outstanding at September 30, 2015 or December 31, 2014.

Note 9.     Stock-Based Compensation and Other Share-Based Grants

The Company accounts for stock-based awards to employees and directors in accordance with FASB ASC 718, “Compensation - Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Options issued to all other non-employee parties are accounted for in accordance with the provisions of FASB ASC 505-50, “Equity-Based Payments to Non-Employees”.

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Stock Options and Warrants

The Company’s 2008 Stock Incentive Plan initially authorized the issuance of up to 2,500,000 shares of common stock in awards to individuals under the plan. On November 19, 2010, an amendment to the 2008 Stock Incentive Plan increased the authorized shares from 2,500,000 to 4,810,000. On November 8, 2013, the Company’s stockholders approved a further amendment to the 2008 Stock Incentive Plan to increase from 4,810,000 to 15,000,000 the number of shares of common stock that may be issued pursuant to awards under the plan.

The Company’s 2007 Stock Plan was approved by the Company’s stockholders in 2007, and replaced the 1997 Stock Plan that had previously authorized the granting of a variety of stock-based incentive awards. The 2007 Stock Plan authorizes up to 2,600,000 shares of common stock for issuance pursuant to awards granted to individuals under the plan.

The Board of Directors, who determines the recipients and terms of the awards granted, administers the Company’s stock plans. Awards under the Company’s stock plans are generally granted with an exercise price equal to the average market price of the Company’s stock for the five trading days following the date of approval of the grant. Those option awards generally vest over periods determined by the Board of Directors from immediate to 4 years of continuous service and have 10 year contractual terms.

During the three and nine months ended September 30, 2015, 300,000 and 700,000 options, respectively were granted. During the three and nine months ended September 30, 2014, 3,645,000 and 4,045,000 options, respectively were granted.

During the nine months ended September 30, 2014, options were exercised to acquire 186,458 shares of common stock under the 2007 and 2008 Stock Incentive Plans, and 148,820 shares were retained by the Company in payment of the exercise price of $0.18 weighted average per share and the tax associated with the exercise of the options. At the time of exercise, the intrinsic value of the options exercised was $0.27 per share, and the retained shares had a value of $40,181. During the nine months ended September 30, 2014, options were also exercised to acquire 277,084 shares of common stock under the 2008 Stock Incentive Plan. Cash received upon exercise was $29,709 at a weighted average of $0.11 per share. At the time of exercise, the intrinsic value of the options exercised was $0.23 per share. No options were exercised during the three months ended September 30, 2014, and the three and nine months ended September 30, 2015.

As of September 30, 2015, the Company had $410,288 of unamortized stock-based compensation expense related to options issued to employees and directors, which will be recognized over the remaining weighted average period of 2.9 years. As of September 30, 2014, unamortized stock-based compensation expense related to options issued to employees and directors was $769,045, which was to be recognized over the weighted average period of approximately 3.72 years.

Pursuant to the Loan Agreement, the Company issued Princess Investment warrants to purchase 1,000,000 shares of the Company’s common stock. The warrants are exercisable immediately upon issuance for a five-year period at an exercise price of $0.18 per share on a cashless basis (See Note 7).

The following table summarizes the activity in the Company’s share-based compensation plans and other share-based grants during the nine months ended September 30, 2015.

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	Number of Shares			Weighted Average Exercise Price
Employees and Directors
Options outstanding - January 1, 2015		9,747,767		$	0.20
Granted		400,000		$	0.17
Exercised		-		$	-
Cancelled		(1,832,500	)	$	0.28
Options outstanding - June 30, 2015		8,315,267		$	0.19
Granted		300,000		$	0.12
Exercised		-		$	-
Cancelled		(130,000	)	$	0.19
Options outstanding - September 30, 2015		8,485,267		$	0.18
Non Employees
Warrants outstanding – January 1, 2015 and June 30, 2015		-		$	-
Granted		1,000,000		$	0.18
Exercised		-		$	-
Cancelled		-		$	-
Warrants outstanding - September 30, 2015		1,000,000		$	0.18

Restricted Stock Units (RSUs)

On July 30, 2010, the Company awarded each of Lonnie D. Schnell (the Company’s Chief Executive Officer through April 10, 2015) and Larry Dyne (the Company’s Chief Executive Officer effective April 13, 2015 and President at the time) a restricted stock unit award (an “RSU Award”) for 5,778,500 shares of the Company’s common stock. Each RSU Award vested 50% on August 30, 2011, and 10% on each date which is 18, 24, 30, 36 and 42 months following the grant date, subject to partial acceleration of vesting as part of the executives’ severance benefits and full acceleration of vesting upon a change in control of the Company. As of July 30, 2010, the RSUs were valued at $2,263,884, which was reduced by the fair value of the options surrendered by the employees in connection with these grants.

On August 30, 2010, Mr. Schnell and Mr. Dyne elected to defer the settlement in common shares of 5,434,200 RSUs beyond the vesting dates.

On January 30, 2014, 610,894 shares of common stock were issued upon final settlement of vested restricted stock units, and the equivalent of 544,806 shares were retained by the Company in payment of the tax associated with the vesting of restricted stock units previously granted to the reporting persons. During the three and nine months ended September 30, 2015 no shares were issued upon settlement of vested restricted stock units.

There were no outstanding RSUs and no unamortized stock-based compensation expense related to RSUs as of September 30, 2015 and December 31, 2014.

Note 10.      Income taxes

Provision for (benefit from) income taxes, net, for the three and nine months ended September 30, 2015 was $(8,431) and $128,746, respectively. Provision for income taxes, net, for the three and nine months ended September 30, 2014 was $161,165 and $732,299, respectively.

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Current income taxes receivable were associated with foreign and domestic prepayments net of income tax payable, and totaled $8,503 and $66,270 as of September 30, 2015 and December 31, 2014, respectively.

Current income taxes payable were principally associated with foreign withholdings, funds transfers, and income tax payable from the Company’s Asia operations. Current income taxes payable as of September 30, 2015 and December 31, 2014 totaled $184,734 and $78,455, respectively, and were included in accrued expenses.

Deferred income tax assets, net, totaled $6,143,193 and $6,120,838 as of September 30, 2015 and December 31, 2014, respectively, are included in long term deferred income tax assets, net, and in current deferred income tax assets, net.

Deferred income tax liabilities totaled $7,318 and $13,961 as of September 30, 2015 and December 31, 2014, respectively.

Note 11.     Commitments and Contingencies

The Company currently has pending claims and complaints that arise in the ordinary course of the Company’s business. The Company believes that it has meritorious defenses to these claims and that the claims are either covered by insurance or would not have a material effect on the Company’s consolidated financial position or results of operations if adversely determined against the Company.

In November 2002, the FASB issued Topics of the FASB ASC 460-10, “Guarantees” (“ASC 460-10”) and FASB ASC 850-10, “Related Party Disclosures” (”ASC 850-10”). The following is a summary of the Company’s agreements that it has determined are within the scope of ASC 460-10 and ASC 850-10:

● In accordance with the bylaws of the Company, and indemnification agreements entered into with the members of the Board of Directors and executive officers, the Company’s officers and directors are indemnified for certain events or occurrences arising as a result of the officer or director serving in such capacity. The term of the indemnification period is for the lifetime of the officer or director. The maximum potential amount of future payments the Company could be required to make under the indemnification provisions of its bylaws and indemnification agreements is unlimited. However, the Company has a director and officer liability insurance policy that reduces its exposure and enables it to recover a portion of any future amounts paid. As a result of its insurance policy coverage, the Company believes the estimated fair value of the indemnification provisions of its bylaws and indemnification agreements is minimal and therefore, the Company has not recorded any related liabilities.

● The Company enters into indemnification provisions under its agreements with investors and its agreements with other parties in the normal course of business, typically with suppliers, customers and landlords. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. These indemnification provisions often include indemnifications relating to representations made by the Company with regard to intellectual property rights, and generally survive termination of the underlying agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal and accordingly, the Company has not recorded any related liabilities.

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Note 12.      Segment Reporting and Geographic Information

The Company manufactures and distributes a full range of zipper (Talon Zipper), trim (Talon Trim) and waistband, shirt collars and other apparel components utilizing proprietary stretch technology (Talon Tekfit) to manufacturers of fashion apparel, specialty retailers and mass merchandisers. The Company’s organization is based on divisions representing the major product lines, and the Company’s operating decisions use these divisions to assess performance, allocate resources and make other operating decisions. Within these product lines there is not enough difference between the types of products to justify segmented reporting by product type or to account for these products separately. The net revenues and operating margins for the three primary product groups are as follows:

	Three Months ended September 30, 2015
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	3,981,191	$	5,516,407	$	494,493	$	9,992,091
Cost of goods sold		2,888,204		3,414,912		315,434		6,618,550
Gross profit	$	1,092,987	$	2,101,495	$	179,059		3,373,541
Operating expenses								3,210,310
Income from operations							$	163,231

	Three Months ended September 30, 2014
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	6,011,455	$	5,669,249	$	69,266	$	11,749,970
Cost of goods sold		4,402,750		3,562,909		65,579		8,031,238
Gross profit	$	1,608,705	$	2,106,340	$	3,687		3,718,732
Operating expenses								3,403,610
Income from operations							$	315,122

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	Nine Months ended September 30, 2015
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	17,924,116	$	17,133,223	$	1,530,452	$	36,587,791
Cost of goods sold		13,099,723		10,574,619		943,042		24,617,384
Gross profit	$	4,824,393	$	6,558,604	$	587,410		11,970,407
Operating expenses								11,180,154
Income from operations							$	790,253

	Nine Months ended September 30, 2014
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	20,420,661	$	18,538,867	$	92,729	$	39,052,257
Cost of goods sold		14,569,223		11,532,952		90,934		26,193,109
Gross profit	$	5,851,438	$	7,005,915	$	1,795		12,859,148
Operating expenses								10,920,267
Income from operations							$	1,938,881

The Company distributes its products internationally and has reporting requirements based on geographic regions. Revenues are attributed to countries based upon customer delivery locations and the net book value of long-lived assets (consisting of property and equipment and intangibles) is attributed to countries based on the location of the assets, as follows:

Sales:	Three Months Ended September 30,				Nine Months Ended September 30,
Country / Region	2015		2014		2015		2014
United States	$	738,342	$	928,465	$	2,411,853	$	3,326,100
China		2,741,111		3,903,834		10,235,769		12,923,325
Hong Kong		2,456,406		2,858,004		7,889,511		9,079,162
Bangladesh		556,210		585,929		3,033,607		1,693,452
Vietnam		672,265		434,491		2,320,113		1,544,686
India		749,785		718,903		2,182,377		1,983,872
Other		2,077,972		2,320,344		8,514,561		8,501,660
Total	$	9,992,091	$	11,749,970	$	36,587,791	$	39,052,257

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	September 30,		December 31,
	2015		2014
Long-lived Assets:
United States	$	4,785,588	$	4,554,831
China		172,746		178,873
Hong Kong		102,255		150,966
Total	$	5,060,589	$	4,884,670

Note 13.      Subsequent Events

The Company evaluated subsequent events after the balance sheet date of September 30, 2015 through the date of the filing of this report, and determined that there were no reportable subsequent events.

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward Looking Statements

Overview

This report and other documents we file with the Securities and Exchange Commission contain forward looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business or others on our behalf, our beliefs and our management’s assumptions. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict. We describe our respective risks, uncertainties, and assumptions that could affect the outcome or results of operations below. We have based our forward looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied, or forecast by our forward looking statements. Reference is made in particular to forward looking statements regarding projections or estimates concerning our business, including adequate liquidity to fund our operations and meet our other cash requirements, demand for our products and services, mix of revenue streams, ability to control or reduce operating expenses, anticipated gross margins and operating results, cost savings, product development efforts, general outlook of our business and industry, international businesses, and competitive position.

The following management's discussion and analysis is intended to assist the reader in understanding our consolidated financial statements and our business. This management’s discussion and analysis is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and accompanying notes.

Talon International, Inc. designs, manufactures, sells and distributes apparel zippers, various apparel trim products and specialty waistbands, shirt collars, shape slimming panels and other apparel components to manufacturers of fashion apparel, specialty retailers and mass merchandisers. We sell and market these products under various branded names including Talon® and Tekfit®. As a result, we operate the business globally under three product groups - Talon Zipper, Talon Trim and Talon Tekfit.

We pursue the global expansion of our business through the establishment of Talon owned sales and distribution locations, and strategic manufacturing relationships. The manufacturing arrangements, in combination with Talon owned and affiliated facilities under the Talon brand, improve our time-to-market throughout the world by sourcing, finishing and distributing to apparel manufacturers in their local markets.

Our primary business focus is on serving as an outsourced apparel zipper, trim and inner lining supplier, product design and development, sampling and sourcing department for the most demanding brands and retailers. We believe that design differentiation among brands and retailers is a critical marketing tool for our customers. By assisting our customers in the design, development, sampling and sourcing of all apparel components other than fabric and thread, we generally achieve higher margins for our products, create long-term relationships with our customers, grow our sales to a particular customer by serving a larger proportion of their brands and better differentiate our sales and services from those of our competitors. We are expanding our business globally, to better serve our apparel customers at the factory level, in addition to global brands and retailers. We believe we can lead the industry in apparel accessories by having strong relationships with our brand and retail customers and having a distributed service organization to serve our factory customers globally.

Our Talon Tekfit business provides manufacturers with Talon’s patented fabric stretch technology, manufacturing know-how, proprietary equipment and materials necessary to produce expandable waistbands, shirt collars, shape slimming panels and various other stretch technology apparel inner lining components. In recent years we have begun to actively expand our marketing and selling efforts of this unique product within the industry.

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The adoption of new and innovative technology by major retailers, particularly where it modifies the style, design or performance of a garment, is a complicated and time-consuming process. New product innovations by major retailers can require 10 to 12 months to complete the design, marketing and manufacturing of the new item, and depending upon the seasonal aspect of the garment, introduction of the product to the market could require several additional months. Accordingly, the re-introduction of the Talon Tekfit technology requires significant time to accomplish adoption within the retailers’ products. However, once adopted we anticipate the production volumes will continue to build as the technology is accepted across multiple styles with a retailer.

Seasonality

We typically experience seasonal fluctuations in sales volume consistent with the purchase demands of the apparel industry. In most years, these seasonal fluctuations result in lower sales volumes for our business in the first and fourth quarters of each year due to the seasonal buying patterns by the majority of our customers. Sales of our products typically precede the retail sales patterns by approximately 90 to 150 days, with this cycle pattern closer to 45 to 75 days for our more generic products sold to mass merchandisers. The apparel retailers typically experience their highest sales volumes during the fourth quarter in association with year-end holiday purchases. Backlogs of sales orders are not considered material in the industries in which we compete, which reduces the predictability of our sales and reinforces the volatility of these cyclical buying patterns on our sales volume. Operating expenses typically follow our seasonal sales patterns fluctuating with the quarterly sales. However our first quarter is typically burdened with higher costs associated with year-end audits, legal reviews, and costs associated with SEC filings, resulting in proportionally higher costs in the first quarter. Because of these fluctuations in our sales and operating costs, results for any quarter are not necessarily indicative of the results that may be achieved for the full year.

Results of Operations

The following table sets forth selected statements of operations data shown as a percentage of net sales for the periods indicated:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of goods sold		66.2			68.4			67.3			67.1
Gross profit		33.8			31.6			32.7			32.9
Sales and marketing expenses		15.0			13.9			13.0			12.2
General and administrative expenses		17.2			15.0			17.5			15.7
Interest expense, net		1.3			0.8			0.9			0.8
Loss on extinguishment of debt		1.3			0.0			0.4			0.0
Provision for (benefit from) income taxes, net		(0.1	)		1.4			0.4			1.9
Net income (loss)		(0.9	)%		0.5	%		0.5	%		2.3	%

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Sales

For the three and nine Months ended September 30, 2015 and 2014, sales by geographic region based on the customer delivery locations as a percentage of sales were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
Region	2015			2014			2015			2014
United States		7.4	%		7.9	%		6.6	%		8.5	%
China		27.4			33.2			28.0			33.1
Hong Kong		24.6			24.3			21.6			23.2
Bangladesh		5.6			5.0			8.3			4.3
Vietnam		6.7			3.7			6.3			4.0
India		7.5			6.1			6.0			5.1
Other		20.8			19.8			23.2			21.8
		100.0	%		100.0	%		100.0	%		100.0	%

Sales for the three months ended September 30, 2015 were $9,992,000, reflecting a decrease of $1,758,000 or 15.0% as compared to the same period in 2014. Our Talon Zipper products sales for the three months ended September 30, 2015 were $2,030,000 lower than the same period in 2014. Talon Zipper products sales for the three months ended September 30, 2015 decreased by $1,117,000 within our mass merchandising brand customers as compared to 2014 and by $913,000 in sales to our specialty retail brands customers as compared to 2014. For the three months ended September 30, 2015, Talon Trim products sales declined by $153,000 compared to the same period in 2014. Substantially all of our Talon Trim products sales are to our specialty retail branded customers. For the three months ended September 30, 2015, the Talon Tekfit products sales increased by $425,000 compared to the same period in 2014, mainly due to new Talon Tekfit programs and customers.

Sales for the nine months ended September 30, 2015 were $36,588,000, reflecting a decrease of $2,464,000 or 6.3% as compared to the same period in 2014. Our Talon Zipper products sales for the nine months ended September 30, 2015 were $2,497,000 lower than the same period in 2014. Talon Zipper products sales for the nine months ended September 30, 2015 decreased by $2,671,000 within our mass merchandising brand customers as compared to 2014, which was offset by a $174,000 increase in sales to our specialty retail brands customers as compared to 2014. For the nine months ended September 30, 2015, Talon Trim products sales declined by $1,406,000 compared to the same period in 2014. Substantially all of our Talon Trim products sales are to our specialty retail branded customers. For the nine months ended September 30, 2015, the Talon Tekfit products sales increased by $1,438,000 compared to the same period in 2014, mainly due to new Talon Tekfit programs and customers.

The lower sales experienced in the third quarter of 2015 compared to 2014 principally reflected continued weakness in our mass merchandising Talon Zipper customers and selected specialty retail brand customers, including specialty teen retailers we serve with our Talon Zipper and Talon Trim product sales. This marks a continuation of the general apparel retail trends including weakness which began in the second quarter of 2014 and which have continued throughout much of 2015. While retail trends are highly cyclical, industry data indicates that with lower consumer demand and excess carryover retail inventories which have been observed in the general apparel retail markets, the potential remains for continued weakness within the sensitive mass merchandising and specialty retail brand customers’ sales, throughout the remainder of this year.

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Gross Profit

Gross profit for the three months ended September 30, 2015 was $3,374,000 (or 33.8% of sales) as compared to $3,719,000 (or 31.6% of sales) during the same period in 2014, reflecting a reduction of $345,000, principally attributable to lower overall sales volumes and offset by lower freight, duty and manufacturing support costs and improved product mix.

Gross profit for the nine months ended September 30, 2015 was $11,970,000 (or 32.7% of sales) as compared to $12,859,000 (or 32.9% of sales) during the same period in 2014, reflecting a reduction of $889,000, principally attributable to lower overall sales volumes and higher manufacturing support costs.

A recap of the change in gross profit for the three and nine months ended September 30, 2015, as compared to the same period in 2014, is as follows:

	Three Months Ended September 30, 2015 as compared to the same period in 2014						Nine Months Ended September 30, 2015  as compared to the same period in 2014
	$ (1)			%(1)			$ (1)			%(1)
Gross profit changes as a result of:
Lower sales volumes		(677,000	)		(18.2	)		(722,000	)		(5.6	)
Change in mix of products		66,000			1.8			(6,000	)		(0.0	)
Lower (higher) freight and duty costs		130,000			3.5			(8.000	)		(0.1	)
Lower (higher) manufacturing overhead costs		136,000			3.6			(153,000	)		(1.2	)
Gross profit change		(345,000	)		(9.3	)		(889,000	)		(6.9	)

(1) Represents the amount or percentage, as applicable, of change in each item in the three and nine months ended September 30, 2015 period as compared to the same period in 2014.

Sales and marketing expenses

Sales and marketing expenses for the three months ended September 30, 2015 totaled $1,495,000, a decrease of $142,000 as compared to the same period in 2014, mainly due to $112,000 in reduced compensation costs, $61,000 in reduced marketing expense and new product development costs and $59,000 in reduced travel and entertainment expenses offset by $44,000 in increased facilities and related expenses.

Sales and marketing expenses for the nine months ended September 30, 2015 totaled $4,779,000, slightly increased as compared to the same period in 2014, mainly due to $124,000 in increased facilities and related expenses costs and $27,000 in increased travel and entertainment expenses, offset by $134,000 in reduced marketing expense and new product development costs and $32,000 reduced compensation costs.

General and administrative expenses

General and administrative expenses for the three months ended September 30, 2015 totaled $1,716,000 or 17.2% as a percentage of sales, as compared to general and administrative expenses in the prior year of $1,767,000 or 15.0% percentage of sales. General and administrative expenses were lower by $51,000 during the three months ended September 30, 2015, as compared to the same period in 2014, mainly due to a reduction in facilities and related expenses.

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General and administrative expenses for the nine months ended September 30, 2015 totaled $6,401,000 or 17.5% as a percentage of sales, as compared to general and administrative expenses in the prior year of $6,166,000 or 15.8% as a percentage of sales. General and administrative expenses were higher by $236,000 during the nine months ended September 30, 2015, as compared to the same period in 2014, mainly due to a $715,000 one-time accrual for severance payments to our former CEO and board member, recognized upon separation during the three months ended June 30, 2015, offset by a $401,000 reduction in other compensation costs and a $187,000 reduction in facilities and related expenses.

Interest expense and interest income

Interest expense for the three and nine months ended September 30, 2015 and 2014 included borrowings under our Credit Facilities with MUFG Union Bank, N.A. (formerly Union Bank, N.A., “Union Bank”) during 2014 and 2015 and Princess Investment Holdings, Inc. (“Princess Investment”) only in 2015 and the related amortization of deferred financing costs and amortization of debt discounts (See Note 7 to the accompanying Notes to Consolidated Financial Statements). A brief summary of interest expense and interest income is presented below:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Amortization of deferred financing costs	$	43,000		$	23,000		$	101,000		$	68,000
Amortization of debt discounts		8,000			-			8,000			-
Interest expense under Credit Facilities		76,000			75,000			218,000			247,000
Other interest expense		2,000			1.000			4,000			6,000
Interest expense		129,000			99,000			331,000			321,000
Interest income		(1,000	)		(2,000	)		(2,000	)		(3,000	)
Interest expense, net	$	128,000		$	97,000		$	329,000		$	318,000

Loss on extinguishment of debt

Loss on extinguishment of debt in the amount of $134,000 was recorded during the three and nine months ended September 30, 2015 as a result of paying off the Term Note Payable to Union Bank. See Note 7 in the accompanying Notes to Consolidated Financial Statements.

Income taxes 

Provision for (benefit from) income taxes, net, for the three and nine months ended September 30, 2015, was $(8,000) and $129,000, respectively.

Provision for income taxes, net, for the three and nine months ended September 30, 2014, was $161,000 and $732,000, respectively.

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Liquidity and Capital Resources

The following table summarizes selected financial data at September 30, 2015 and December 31, 2014:

	September 30,		December 31,
	2015		2014
Cash and cash equivalents	$	2,566,000	$	2,603,000
Total assets	$	18,780,000	$	18,102,000
Current liabilities	$	11,158,000	$	11,912,000
Long term liabilities	$	2,087,000	$	1,057,000
Stockholders’ equity	$	5,535,000	$	5,134,000

We believe that our remaining cash and cash equivalents and our anticipated cash flows from our operating activities and existing sources of financing will be sufficient to fund our minimum working capital and capital expenditure needs for operating activities for the next 12 months.

As of September 30, 2015, we had additional borrowing availability of $331,000 under our revolving credit line and $1,000,000 under our revolving term loan facility.

Cash and cash equivalents

Cash and cash equivalents marginally decreased by $38,000 at September 30, 2015, as compared to December 31, 2014, principally due to $2,833,000 in Union Bank term loan (“Term Loan Payable”) payments, $600,000 repayments of revolving credit facility (“Revolving Credit Loan”), $139,000 in payments of financing costs associated with credit facilities and $144,000 in payments for the acquisition of property and equipment and intellectual property rights offset by $1,044,000 in cash provided by operating activities, $2,000,000 revolving term loan borrowings from Princess Investment (“Revolving Term Loan”) and $700,000 in Revolving Credit Loan borrowings.

Cash provided by operating activities is our primary recurring source of funds, and reflects net income from operations excluding non-cash charges, changes in operating capital and the impact of seasonality. During the nine months ended September 30, 2015 and 2014, net cash provided by operating activities was $1,044,000 and $1,355,000, respectively.

The net cash provided by operating activities during the nine months ended September 30, 2015 and 2014 resulted principally from:

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	Nine Months Ended September 30,
	2015			2014
Net income before non-cash expenses	$	698,000		$	1,670,000
Inventory reductions (increases)		(69,000	)		215,000
Accounts receivable reductions (increases)		(447,000	)		42,000
Accounts payable and accrued expenses increases (reductions)		944,000			(541,000	)
Other increases in operating capital		(82,000	)		(31,000	)
Net cash provided by operating activities	$	1,044,000		$	1,355,000

Net cash used in investing activities for the nine months ended September 30, 2015 and 2014 was $144,000 and $186,000, respectively, associated mainly with the acquisition of property and equipment, and for the same periods included $23,000 and $40,000 in the acquisition of intellectual property rights, respectively.

Net cash used in financing activities for the nine months ended September 30, 2015 and 2014 was $879,000 and $1,364,000, respectively. In 2015 this reflects $2,833,000 in term loan payments, $600,000 in repayments of Revolving Credit Loan borrowings, $139,000 in payments of financing costs associated with credit facilities and $7,000 in repayment of borrowings under capital leases, offset by $2,000,000 Revolving Term Loan from related party borrowings, and $700,000 in Revolving Credit Loan borrowings under our Union Bank Credit Facilities. In 2014, this reflects $1,250,000, in Term Loan Payable payments, offset by $500,000 Revolving Credit Loan borrowings under our Union Bank Credit Facilities, net of $500,000 in repayments, $144,000 in payments related to taxes associated with the exercise of stock options and RSU settlements, partially offset by $30,000 in proceeds from the exercise of stock options.

On August 10, 2015, we entered into a loan and reimbursement agreement (“Loan Agreement”) with Princess Investment, pursuant to which Princess Investment agreed to make available to the Company Revolving Term Loan of up to $3,000,000. Advances under the Loan Agreement will accrue interest on the unpaid principal balance at an annual rate of 12.5%. Accrued interest on the Revolving Term Loan is payable monthly beginning September 1, 2015, and the principal amount is payable in monthly installments beginning September 1, 2016 and continuing through the maturity date of August 10, 2018. The Loan Agreement requires payment of a $60,000 loan fee at maturity, and together with additional legal fees total financing costs amounted to $99,000.

On August 11, 2015, the Company received an advance from Princess Investment under the Loan Agreement in the amount of $1,500,000, of which $1,440,278 was used to pay off the Term Loan Payable to Union Bank during the quarter ended September 30, 2015 as further described in Note 7 to the accompanying Notes to Consolidated Financial Statements. We borrowed an additional $500,000 during the three months ended September 30, 2015, and we had an outstanding balance of $2,000,000 Revolving Term Loan from Princess Investment at September 30, 2015 (reflecting a balance of $1,889,000 net of debt discounts). Approximately $1,000,000 remained in available borrowings under the Revolving Term Loan as of September 30, 2015.

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On December 31, 2013, the Company entered into a Commercial Credit Agreement (the “Credit Agreement”) with Union Bank. The Credit Agreement initially provided for a 24 month revolving loan commitment and a 36 month term loan. (See Note 7 in the accompanying Notes to Consolidated Financial Statements). We used all of the proceeds of $5,000,000 from the Term Loan Payable and $827,000 of the proceeds of a Revolving Credit Loan under the Union Bank Credit Agreement to repay a $5,800,000 Promissory Note and related interest to CVC California LLC, our controlling stockholder at the time.

The Credit Agreement we entered into with Union Bank provides for a Revolving Credit Loan in the amount of up to $3,500,000 and initially included a Term Loan Payable in the amount of $5,000,000. While the Revolving Credit Loan commitment remains available through December 31, 2015, the Term Loan Payable was extinguished during the quarter ended September 30, 2015 using proceeds from the Revolving Term Loan with Princess Investment Holdings Ltd. (see Note 7 of the accompanying Notes to Consolidated Financial Statements). The Revolving Term Loan commitment with Union Bank will terminate on December 31, 2015 and we intend to refinance the loan with Union Bank by such date using proceeds from an alternate financing source. The payment and performance of all indebtedness and other obligations under the Credit Facilities are secured by liens on substantially all of our assets pursuant to the terms and conditions of one or more Security Agreements and guaranties duly executed by us and our principal operating subsidiaries including Talon Technologies, Inc. (U.S. operation), and Tag-It Pacific Limited (Hong Kong operation).

As of September 30, 2015 and December 31, 2014, we had outstanding borrowings of $1,600,000 and $4,333,000, respectively under our Union Bank Credit Facilities, of which $1,600,000 and $1,500,000, respectively relates to obligations under the Revolving Credit Loan and at December 31, 2014 the remainder relates to the Term Loan Payable. As of September 30, 2015, we had $331,000 in available borrowings under the terms of the Revolving Credit Loan.

The Credit Agreement, as amended through September 30, 2015, contains representations and warranties, affirmative, negative and events of default, applicable to the parent company and its subsidiaries, which are customary for credit facilities of this type. The Credit Agreement initially included financial covenants applicable to the parent company and its subsidiaries, including maintaining a specified Fixed Charge Coverage Ratio between Adjusted EBITDA and future principal and interest payments as of the close of each fiscal quarter; a minimum EBITDA as of the close of each quarter for the 12-month period ended as of the last day of the quarter; and no incurrence of a net loss after taxes for more than two consecutive fiscal quarters commencing January 1, 2015. We did not satisfy the minimum Fixed Charge Coverage Ratio requirement and the minimum EBITDA requirement for the 12-month periods ended September 30, 2014 and December 31, 2014, and in connection therewith obtained waivers of non-compliance from Union Bank for these periods. In exchange for the waivers, we paid fees in the amount of $10,000 and a prepayment in the amount of $500,000 was applied to the principal of the Term Loan Payable as of December 31, 2014, and other certain provisions of the Credit Agreement were amended. During the nine months ended September 30, 2015, we obtained an advance under the Revolving Credit Loan of $700,000, with no borrowings during the three months ended September 30, 2015, and made repayments of $600,000 during the three and nine months ended September 30, 2015, resulting in a net increase in the outstanding borrowings to $1,600,000 at September 30, 2015. On March 3, 2015, we further amended the Credit Agreement with Union Bank and agreed to modify the financial covenants to make certain prepayments to the Term Loan Payable excluded from the Fixed Charge Coverage Ratio calculation, and to re-amortize the Term Loan Payable payments. The additional principal repayments agreed to in the Amendment total $600,000, of which $400,000 were paid during the second quarter of 2015 and the remaining $200,000 were paid during the third quarter of 2015. In connection with the Amendment we paid to Union Bank a loan modification fee of $50,000, half of which was paid on March 31, 2015 and the other half was paid on June 30, 2015. Additional legal fees were charged by Union Bank during the first quarter of 2015 in the amount of $7,000.

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We did not satisfy the minimum EBITDA requirement for the 12-month period ended June 30, 2015, due primarily to a $715,000 one-time accrual for severance payments to our former CEO and board member, that was recognized upon separation during the three months ended June 30, 2015. On August 4, 2015, we obtained a waiver from Union Bank of this non-compliance. We paid Union Bank a waiver fee of $25,000 as a condition to the waiver. During the quarter ended September 30, 2015, we entered into an amendment to the Credit Agreement with Union Bank, changing various contractual terms and which removed the financial covenants contained in the Credit Agreement and permitted the Borrower to incur subordinated indebtedness to Princess Investment Holdings Inc. (“Princess Investment”), a Delaware corporation (which is a related company of Kutula Holdings, a major stockholder and related party to our Company), not exceeding $3,000,000 in aggregate principal amount at any time outstanding; provided, however, that such indebtedness must be subject to a subordination agreement in favor of Union Bank and in form and substance satisfactory thereto. In addition, the Term Loan Payable of $1,440,000 was required to be prepaid in full, as well as all accrued and unpaid interest thereon through the date of prepayment. We paid $18,000 legal fees in connection with the amendment, representing additional financing costs of the Union Bank Credit Facilities. On August 11, 2015, we received from Princess Investment an advance in the amount of $1,500,000 to pay off the Term Loan Payable to Union Bank.

We have financed purchases of furniture and fixtures through various capital lease obligations. Our capital lease obligations as of September 30, 2015 are $102,000 and bear interest at a rate of 8.0% per annum. Under these obligations, we are required to make monthly payments of principal and interest through May 2019.

We have satisfied our working capital requirements primarily through cash flows generated from operations and borrowings under our various Credit Agreements. As we continue to expand globally with apparel manufacturing in offshore locations, our customers are substantially all foreign-based and foreign-owned entities. We continue to evaluate both financing and equity options to provide capital to fund our expansion and on-going operations. If we experience greater than anticipated reductions in sales, we may need to borrow or raise additional capital, or further reduce the scope of our business in order to fund our on-going operations or to satisfy our future short-term operating requirements. The extent of our future long-term capital requirements will depend on many factors, including our results of operations, future demand for our products, the size and timing of possible acquisitions, and our expansion into foreign markets. Our need for additional long-term financing may include the integration and expansion of our operations to exploit our rights under our Talon and Tekfit trade names, and the expansion of our operations in the Asian and other markets. If our cash from operations is less than anticipated, or our working capital requirements and capital expenditures are greater than we expect, we may need to raise debt or equity financing in order to provide for our operations.

Contractual Obligations and Off-Balance Sheet Arrangements 

The following summarizes our contractual obligations at September 30, 2015:

	Payments Due by Period ($)
			Less than		1-3		4-5
Contractual Obligations	Total		1 Year		Years		Years
Revolving term loan from related party	$	2,490,000	$	334,000	$	2,156,000	$	-
Revolving credit loan		1,600,000		1,600,000		-		-
Operating leases		2,725,000		850,000		1,685,000		190,000
Capital leases		102,000		28,000		74,000		-
Total Obligations	$	6,917,000	$	2,812,000	$	3,915,000	$	190,000

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At September 30, 2015 and December 31, 2014, we did not have any relationships with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we do not have any of the risks associated with financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Related Party Transactions

See Note 7 of accompanying notes to consolidated financial statements for a discussion of related party transactions.

Application of Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions for the reporting period and as of the financial statement date. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expense. Actual results could differ from those estimates.

Critical accounting policies are those that are important to the portrayal of our financial condition and results, and which require us to make difficult, subjective and/or complex judgments. Critical accounting policies cover accounting matters that are inherently uncertain because the future resolution of such matters is unknown. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

● Accounts receivable balances are evaluated on a continual basis and allowances are provided for potentially uncollectible accounts based on management’s estimate of their collectibility. If the financial condition of a customer were to deteriorate, resulting in an impairment of its ability to make payments, an additional allowance may be required. Allowance adjustments are charged to operations in the period in which the facts that give rise to the adjustments become known.

● The allowances for doubtful accounts receivable and the bad debt expense (recoveries), net as at and for the three and nine months ended September 30, 2015 and 2014, are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
Allowance for doubtful accounts receivable	$	40,000	$	32,000	$	40,000		$	32,000
Bad debt recoveries, net	$	7,000	$	4,000	$	(7,000	)	$	(5,000	)

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● Inventories are stated at the lower of cost, determined using the first-in, first-out (“FIFO”) basis, or market value and are all substantially finished goods. The costs of inventory include the purchase price, inbound freight and duties, conversion costs and certain allocated production overhead costs. Inventory is evaluated on a continual basis and reserve adjustments are made based on management’s estimate of future sales value, if any, of specific inventory items. Inventory reserves are recorded for damaged, obsolete, excess, impaired and slow-moving inventory. We use estimates to record these reserves. Slow-moving inventory is reviewed by category and may be partially or fully reserved for depending on the type of product and the length of time the product has been included in inventory. Reserve adjustments are made for the difference between the cost of the inventory and the estimated market value, if lower, and charged to operations in the period in which the facts that give rise to these adjustments become known. Market value of inventory is estimated based on the impact of market trends, an evaluation of economic conditions and the value of current orders relating to the future sales of this type of inventory. Inventory reserve is reduced following write-off of reserved inventory and increased by additions to reserve for slow moving inventory not expected to be sold.

● We record deferred tax assets and liabilities arising from temporary timing differences between recorded net income and taxable net income when and if we believe that future earnings will be sufficient to realize the tax benefit. For those jurisdictions where the expiration date of tax benefit carry-forwards or the projected taxable earnings indicate that realization is not likely, a valuation allowance is provided. If we determine that we may not realize all of our deferred tax assets in the future, we will make an adjustment to the carrying value of the deferred tax asset, which would be reflected as an income tax expense. Conversely, if we determine that we will realize a deferred tax asset, which currently has a valuation allowance, we would be required to reverse the valuation allowance, which would be reflected as an income tax benefit. A deferred income tax liability related to indefinite lived intangibles should not be offset against deferred income tax assets. We believe that our estimate of deferred tax assets and liabilities and determination to record a valuation allowance against such assets are critical accounting estimates because they are subject to, among other things, an estimate of future taxable income, which is susceptible to change and dependent upon events that may or may not occur, and because the impact of recording a valuation allowance may be material to the assets reported on the balance sheet and results of operations. See Note 10 in the accompanying Notes to Consolidated Financial Statements.

● Sales are recognized when persuasive evidence of an arrangement exists, product title has passed, pricing is fixed or determinable and collection is reasonably assured. Sales resulting from customer buy-back agreements, or associated inventory storage arrangements are recognized upon delivery of the products to the customer, the customer’s designated manufacturer, or upon notice from the customer to destroy or dispose of the goods. Sales, provisions for estimated sales returns, and the cost of products sold are recorded at the time title transfers to customers. Actual product returns are charged against estimated sales return allowances, which returns have been insignificant.

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● We are currently involved in various lawsuits, claims and inquiries, most of which are routine to the nature of the business and in accordance with FASB ASC 450, “Contingencies”. We accrue estimates of the probable and estimable losses for the resolution of these claims. The ultimate resolution of these claims could affect our future results of operations for any particular quarterly or annual period should our exposure be materially different from our earlier estimates or should liabilities be incurred that were not previously accrued. We believe that we have meritorious defenses to these claims and that the claims are either covered by insurance or would not have a material effect on our consolidated financial position or results of operations if adversely determined against us.

New Accounting Pronouncements

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, to reduce the complexity in accounting for inventory. This ASU requires entities to measure inventory at the lower of cost or net realizable value, replacing the market value approach that required floor and ceiling considerations.  This guidance for public entities is effective for fiscal years beginning after December 15, 2016, with early adoption permitted.  We are in the process of evaluating the adoption of this ASU, but do not expect this to have a material effect on our financial position, results of operations or cash flows.

 In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). The amendment simplifies debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction of the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendment. ASU 2015-03 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning December 15, 2015. Other than reclassification of debt issuance costs net of amortization from assets to liabilities, no other effect is expected to be included on our financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The effective date for the ASU 2014-09 is deferred by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” to annual reporting periods beginning after December 15, 2018. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new standard will replace most existing revenue recognition guidance in U.S. GAAP. The standard permits the use of either the retrospective or cumulative effect transition method. We do not expect that the adoption of this pronouncement will have a material impact on our Consolidated Financial Statements.

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Item 3.     Quantitative and Qualitative Disclosures about Market Risk.

Not Applicable.

Item 4.     Controls and Procedures

Evaluation of Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission's rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.

As of the end of the period covered by this report, management, with the participation of Larry Dyne, our principal executive officer, and Nancy Agger-Nielsen, our principal accounting officer and principal financial officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, Mr. Dyne and Ms. Agger-Nielsen concluded that these disclosure controls and procedures were effective as of the end of the period covered in this Quarterly Report on Form 10-Q.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2015, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II
OTHER INFORMATION

Item 1.      Legal Proceedings

We currently have pending various claims and complaints that arise in the ordinary course of our business. We believe that we have meritorious defenses to these claims and that the claims are either covered by insurance or would not have a material effect on our consolidated financial condition if adversely determined against us.

Item 1A.     Risk Factors

Risk factors are contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. No material change to such risk factors has occurred during the nine months ended September 30, 2015.

Item 6.        Exhibits

Exhibit No.	Description
10.18.7*	Seventh Amendment, dated August 10, 2015, to the Commercial Credit Agreement dated December 31, 2013 between the Registrant and MUFG Union Bank, N.A. (formerly Union Bank, N.A.).
10.24*	Loan and Reimbursement Agreement dated August 10, 2015, between the Registrant and Princess Investment Holdings Inc.
10.24.2*	Pledge and Security Agreement dated August 10, 2015, between the Registrant and Princess Investment Holdings Inc.
10.24.3*	Guaranty Agreement dated August 10, 2015, between the Registrant and Princess Investment Holdings Inc.
10.24.4*	Intercreditor Agreement dated August 10, 2015, between the Registrant, Princess Investment Holdings Inc. and MUFG Union Bank, N.A.
10.24.5*	Subordination Agreement dated August 10, 2015, between the Registrant and Princess Investment Holdings Inc. and MUFG Union Bank, N.A.
10.24.6*	Warrant Agreement dated August 10, 2015, between the Registrant and Princess Investment Holdings Inc.
10.26*	Lease, Unit 1601-08, dated August 10, 2015, between Talon Zipper (Shenzhen) Co. Ltd. (Chinese Operations) and Chen Zhen Guang
10.27**+	Executive Employment Agreement, dated September 3, 2015, between the Registrant and Nancy Agger-Nielsen.
10.28**+	Exhibit to Employment Agreement dated July 30, 2010, between the Registrant and Larry Dyne.
31.1**	Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Exhibit No.	Description
31.2**	Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1***	Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation
101.DEF**	XBRL Taxonomy Extension Definition
101.LAB**	XBRL Taxonomy Extension Labels
101.PRE**	XBRL Taxonomy Extension Presentation

+ Indicates a management contract or compensatory plan.

* Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2015.

** Filed herewith.

*** Furnished herewith.

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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.

Dated:     November 12, 2015	/s/ Larry Dyne
	Larry Dyne
	Chief Executive Officer
	(Principal Executive Officer)

/s/ Nancy Agger-Nielsen

Nancy Agger-Nielsen

Chief Financial Officer

(Principal Accounting Officer and Principal Financial Officer)

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EX-10.27

Exhibit 10.27

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (this “Agreement”) is made and entered into as of this 3rd day of September, 2015 (the “Effective Date”), by and between TALON INTERNATIONAL, INC., a Delaware corporation (the “Company”) and NANCY AGGER-NIELSEN (“Executive”).

1.     Engagement and Duties.

1.1     Commencing as of the Effective Date, and upon the terms and subject to the conditions set forth in this Agreement, the Company hereby engages and employs Executive as an officer of the Company, with the title and designation of Chief Financial Officer of the Company. Executive hereby accepts such engagement and employment.

1.2     Executive’s duties and responsibilities shall be those normally and customarily vested in the office of Chief Financial Officer of a corporation, subject to the supervision, direction and control of the Chief Executive Officer (“CEO”) and the Board of Directors (the “Board”) of the Company. Executive shall report directly to the CEO.

1.3     Executive agrees to devote her primary business time, energies, skills, efforts and attention to her duties hereunder, and will not, without the prior written consent of the Board, which consent will not be unreasonably withheld, render any material services to any other for-profit and/or not-for-profit business concern or organization. Executive will use her best efforts and abilities faithfully and diligently to promote the Company’s business interests.

1.4     Except for routine travel incident to the business of the Company, Executive shall perform her duties and obligations under this Agreement principally from an office provided by the Company in Woodland Hills, California, or such other location in Los Angeles or Ventura County, California, as the Board may from time to time determine.

2.     Term of Employment. Executive’s employment pursuant to this Agreement shall commence on the Effective Date and shall terminate on the earliest to occur of the following (in any case, the “Term”):

(a)     the close of business on December 31, 2016, provided, that if the Company has not given Executive Notice of its decision not to renew the Term on or before April 1, 2016, then, unless otherwise terminated as provided below, the Term shall be automatically extended until the earlier of (i) a date which is nine (9) months following delivery after April 1, 2016 by the Company to Executive of Notice of its decision not to extend the Term further, and (ii) December 31, 2017;

(b)     the death of Executive;

(c)     delivery to Executive of written Notice (as defined below) of termination by the Company if Executive shall suffer a “Permanent Disability,” which for purposes of this Agreement shall mean a condition that entitles Executive to benefits under an applicable Company long-term disability plan or, if no such plan exists, a physical or mental disability which, in the reasonable judgment of the Board, is likely to render Executive unable to perform her duties and obligations under this Agreement for 90 days in any 12-month period;

(d)     delivery to Executive of written Notice of termination by the Company for “Cause,” which Notice shall identify the particular details of the conduct that the Company believes constitutes Cause. For purposes of this Agreement, “Cause” shall mean: (i) any act or omission knowingly undertaken or omitted by Executive with the intent of causing damage to the Company, its properties, assets or business or its stockholders, officers, directors or employees; (ii) any fraud, misappropriation or embezzlement by Executive resulting in a material personal profit to Executive, in any case, involving properties, assets or funds of the Company or any of its subsidiaries; (iii) Executive’s consistent failure to materially perform her normal duties as described in Section 1.2 , other than any such failure resulting from Executive’s Permanent Disability; (iv) conviction of, or pleading nolo contendere to, (A) any crime or offense involving monies or other property of the Company; or (B) any felony offense involving a crime of moral turpitude; or (v) Executive’s chronic or habitual use or consumption of drugs or alcoholic beverages, in either case, that causes material damage to the Company, its properties, assets or business, provided, that to the extent any circumstances that would otherwise constitute Cause shall be capable of cure, Executive shall be given no less than thirty days to cure such circumstances prior to any termination of her employment for Cause;

(e)     delivery to Executive of written Notice of termination by the Company “without Cause;”

(f)     delivery to the Company of written Notice of termination by Executive for “Good Reason,” by reason of: (i) the material diminution of Executive’s duties, job title or responsibilities as provided in Section 1 above; (ii) a relocation of Executive’s principal work location to a location that is inconsistent with the terms of Section 1.4 above; (iii) a material breach by the Company of this Agreement, including without limitation, a material reduction in any component of Executive’s compensation or benefits as provided for herein; or (iv) a change in Executive’s reporting arrangement such that Executive no longer reports directly to the CEO; or (v) the commencement of a voluntary or involuntary proceeding by or against the Company under Chapter 7 of the United States Bankruptcy Code or other law or statute of any jurisdiction providing for the cessation of the Company’s business and the liquidation of its assets; or

(g)     delivery to the Company of written Notice of termination by Executive without “Good Reason.”

3.     Compensation; Executive Benefit Plans.

3.1     The Company shall pay to Executive a base salary (the “Base Salary”) at an annual rate of $225,000, retroactive to March 3, 2015, which Base Salary shall be subject to increase, but not decrease, at the discretion of the Board. The Base Salary shall be payable in installments throughout the year in the same manner and at the same times the Company pays base salaries to similarly situated executive officers of the Company, but in any event, no less frequently than monthly. At the first payroll payment date following the Effective Date, the Company shall pay to Executive the difference between the Base Salary and the amount of base salary previously paid to Executive for the period from (and including) March 3, 2015 through the Effective Date.

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3.2     Commencing with fiscal year 2015 and for each fiscal year during the Term thereafter during which Executive is performing services to the Company, Executive shall be eligible to receive an annual cash bonus on the terms described on Exhibit A attached hereto (the “Annual Bonus”).

3.3     During the Term, Executive shall be entitled each year to vacation for a minimum of three calendar weeks, increasing to a minimum of four calendar weeks after four consecutive years of employment with the Company, pro-rated for any partial year of service during the Term, plus such additional period or periods as the Board may approve in the exercise of its reasonable discretion, during which time her compensation shall be paid in full.

3.4     During the Term, Executive shall be entitled to reimbursement from the Company for the reasonable costs and expenses which she incurs in connection with the performance of her duties and obligations under this Agreement, substantiated in a manner consistent with the Company’s practices and policies as adopted or approved from time to time by the Board for executive officers. For the avoidance of doubt, “business class” travel shall constitute reasonable costs and expenses on any flight greater than five hours in duration.

3.5     The Company may deduct from any compensation payable to Executive the minimum amounts sufficient to cover applicable federal, state and/or local income and employment tax withholding.

4.     Other Benefits. During the Term, Executive shall be eligible to participate in all operative employee compensation, fringe benefit and perquisite, and other benefit and welfare plans or arrangements of the Company then in effect from time to time and in which similarly situated executive officers of the Company generally are entitled to participate, including without limitation, to the extent then in effect, incentive, group life, medical, dental, prescription, disability and other insurance plans, all on terms at least as favorable as those offered to similarly situated executives of the Company.

5.     Termination of Employment. Subject to the provisions of this Section 5, either the Company or Executive may terminate Executive’s employment at any time for any reason or no reason. The following provisions shall control any such termination of Executive’s employment.

5.1     Termination Without Cause, for Good Reason, or due to Executive’s death or Permanent Disability. The Company may terminate Executive’s employment without Cause at any time upon 15 days’ prior written Notice to Executive, and Executive may terminate her employment with Good Reason at any time upon 15 days’ prior written Notice to the Company, in each case, subject to any applicable cure periods (in the case of a termination without Cause or for Good Reason, the date specified in any such Notice in accordance with this Section 5.1 shall constitute the “Date of Termination”). For purposes of clarity, the Company’s delivery of Notice in accordance with Section 2(a) of its decision not to renew the Term shall not constitute termination without Cause, and shall be governed by Section 5.5 below. Executive’s employment shall also terminate upon the occurrence of Executive’s death or Permanent Disability (in the case of a termination due to Executive’s death or Permanent Disability, the date of the death or the date specified in a Notice from the Company indicating termination due to Permanent Disability shall constitute the “Date of Termination”). If Executive’s employment is terminated pursuant to this Section 5.1, the Company shall promptly, or in the case of obligations described in clauses (c) and (e) below, as such obligations become due to Executive, pay or provide to Executive (or her estate), (a) Executive’s earned but unpaid Base Salary accrued through such Date of Termination, (b) accrued but unpaid vacation time through such Date of Termination, (c) any Annual Bonus required to be paid to Executive pursuant to this Agreement for any fiscal year of the Company ending on or prior to the Date of Termination, to the extent payable, but not previously paid, (d) reimbursement of any business expenses incurred by Executive prior to the Date of Termination that are reimbursable under Section 3.4 above, and (e) any vested benefits and other amounts due to Executive under any plan, program, policy of, or other agreement with, the Company (together, the “Accrued Obligations”). In addition, if Executive (or her estate) delivers to the Company within thirty (30) days following the Date of Termination a signed settlement agreement and general release in the form attached hereto as Exhibit B (the “Release”) and satisfies all conditions to make the Release effective, Executive (or her estate) shall be entitled to the following payments and benefits (the “Severance”) from the Company:

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(i)     Payment of an aggregate amount equal to the following number of months (such number of months, the “Severance Period”) of Base Salary:

Number of 12 Full Months Employed by Company	Number of Months of Base Salary
Less than or equal to 2	3 Months
Greater than 2 but less than or equal to 3	4 Months
Greater than 3 but less than or equal to 4	5 Months
Greater than 4	6 Months

The Severance shall be paid on the date of Executive’s “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code (a “separation from service”), provided that the Release is effective and subject to Section 5.6 below.

(ii)     If Executive is eligible for, and elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and/or the California Continuation Benefits Replacement Act (“Cal-COBRA”), as applicable, for Executive and Executive’s eligible dependents (as applicable) under a health, dental, or vision plan sponsored by the Company, within the time period prescribed pursuant to COBRA and/or Cal COBRA, the Company will reimburse Executive, as and when due to the COBRA and/or Cal-COBRA carrier, for up to $1,500 per month of the premiums for such coverage until the earliest to occur of (A) expiration of the Severance Period, (B) the date upon which Executive enrolls for coverage under a health, dental, or vision insurance plan of a subsequent employer of Executive or Executive’s spouse, and (C) the date Executive or Executive’s dependents cease to be eligible for COBRA and Cal-COBRA coverage. These payments will be subject to any applicable tax withholdings (including tax withholdings necessary to ensure that the provision of this benefit is not deemed a discriminatory practice giving rise to penalties to the Company under applicable laws) and will be counted as coverage pursuant to COBRA and/or Cal-COBRA to the maximum extent permitted under applicable law.

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5.2     Annual Bonus. For purposes of clarity, the Annual Bonus for a fiscal year shall be deemed earned by Executive if she is employed with the Company on December 31 of such fiscal year. If the Date of Termination occurs on or after December 31 of a fiscal year, the Accrued Obligations shall include the Annual Bonus, if any, for such fiscal year even if the Annual Bonus has not yet been calculated as of the Date of Termination. Executive shall not be entitled to payment of the Annual Bonus, or any portion thereof, for the fiscal year in which the Date of Termination occurs. The Company shall pay Executive the Annual Bonus, if any, as provided in Exhibit A.

5.3     Cause. If Executive’s employment becomes terminable by the Company for Cause, the Company may terminate Executive’s employment immediately (subject to the cure rights described above) and Executive shall be entitled to receive the Accrued Obligations upon the Date of Termination, or, in the case of benefits described in clauses (c) and (e) of Section 5.1, as such obligations become due to Executive.

5.4     Resignation. Executive may terminate her employment without Good Reason upon thirty (30) days’ Notice to the Company. If Executive so terminates her employment, Executive shall be entitled to receive the Accrued Obligations promptly, or, in the case of benefits described in clauses (c) and (e) of Section 5.1, as such obligations become due to Executive.

5.5     Nonrenewal. In the event that either the Company or the Executive elects not to renew the Term (or any extension thereof) in accordance with Section 2(a), Executive shall be entitled to receive the Accrued Obligations upon the Date of Termination, or, in the case of benefits described in clauses (c) and (e) of Section 5.1, as such obligations become due to Executive.

5.6     Six-Month Delay. Notwithstanding anything to the contrary in this Agreement, no Severance payments or benefits shall be paid to Executive during the six-month period following the Executive’s separation from service to the extent that the Company determines in good faith that paying such amounts at the time or times indicated in this Section 5 would cause the Executive to incur an additional tax under Section 409A of the Code (in which case such amounts shall be paid at the time or times indicated in this Section 5.6). If the payment of any such amounts are delayed as a result of the previous sentence, then on the first day following the end of such six-month period, the Company will pay the Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to the Executive during such six-month period.

6.     Confidentiality of Proprietary Information and Material.

6.1     Industrial Property Rights. For the purpose of this Agreement, “Industrial Property Rights” shall mean all of the Company’s patents, trademarks, trade names, inventions, copyrights, know-how, formulas and science, now in existence or hereafter developed or acquired by the Company or for its use, relating to any and all products and services which are developed, formulated and/or manufactured by the Company.

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6.2     Trade Secrets. For the purpose of this Agreement, “Trade Secrets” shall mean any formula, pattern, device, or compilation of information that is used in the Company’s business and gives the Company an opportunity to obtain an advantage over its competitors who do not know and/or do not use it. This term includes, but is not limited to, information relating to the marketing of the Company’s products and services, including price lists, pricing information, customer lists, customer names, the particular needs of customers, information relating to their desirability as customers, financial information, intangible property and other such information which is not in the public domain.

6.3     Technical Data. For the purpose of this Agreement, “Technical Data” shall mean all information of the Company in written, graphic or tangible form relating to any and all products which are developed, formulated and/or manufactured by the Company, as such information exists as of the Effective Date or is developed by the Company during the Term of this Agreement.

6.4     Proprietary Information. For the purpose of this Agreement, “Proprietary Information” shall mean all of the Company’s Industrial Property Rights, Trade Secrets and Technical Data. Proprietary Information shall not include any information which (i) was lawfully in the possession of Executive prior to Executive’s employment with the Company, (ii) may be obtained by a reasonably diligent businessperson from readily available and public sources of information, (iii) is lawfully disclosed to Executive after termination of Executive’s employment by a third party which does not have an obligation to the Company to keep such information confidential, or (iv) is independently developed by Executive without utilizing any of the Company’s Proprietary Information.

6.5     Agreement Not To Copy Or Use. Executive agrees, at any time during the Term of this Agreement and for a period of ten years thereafter, not to copy, use or disclose (except (i) as required, authorized or permitted in connection with the performance of Executive’s services hereunder to the Company, (ii) as required by law after first notifying the Company and giving it an opportunity to object, or (iii) as required to enforce Executive’s rights under this Agreement) any Proprietary Information without the Company’s prior written permission. The Company may withhold such permission as a matter within its sole discretion during the Term of this Agreement and thereafter.

7.     Return of Corporate Property. Upon any termination of this Agreement, Executive shall turn over to the Company all property, writings or documents then in her possession or custody belonging to or relating to the affairs of the Company or comprising or relating to any Proprietary Information.

8.     Discoveries and Inventions.

8.1     Disclosure. Executive will promptly disclose in writing to the Company complete information concerning each and every invention, discovery, improvement, device, design, apparatus, practice, process, method, product or work of authorship, in any case, relating to the business, products, practices, techniques or confidential information of the Company, whether patentable or not, made, developed, perfected, devised, conceived or first reduced to practice by Executive, (hereinafter referred to as “Developments”), either solely or in collaboration with others, (a) prior to the Term while working for the Company, (b) during the Term or (c) within six months after the Term.

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8.2     Assignment. Executive, to the extent that she has the legal right to do so, hereby acknowledges that any and all Developments that are created during the Term, are the property of the Company and hereby assigns and agrees to assign to the Company any and all of Executive’s right, title and interest in and to any and all of such Developments; provided, however, that, in accordance with California Labor Code Sections 2870 and 2872, the provisions of this Section 8.2 shall not apply to any Development that Executive developed entirely on her own time without using the Company’s equipment, supplies, facilities or trade secret information except for those Developments that either:

(a)     relate at the time of conception or reduction to practice of the Development to the Company’s business, or actual or demonstrably anticipated research or development of the Company; or

(b)     result directly from any work performed by Executive for the Company.

8.3     Assistance of Executive. Upon the Company’s request and at no expense to Executive, whether during the Term or thereafter, Executive will do all reasonable lawful acts, including, but not limited to, the execution of papers and lawful oaths and the giving of testimony, that, in the reasonable opinion of the Company, its successors and assigns, may be necessary or desirable in obtaining, sustaining, reissuing, extending and enforcing United States and foreign Letters Patent, including, but not limited to, design patents, on any and all Developments and for perfecting, affirming and recording the Company’s complete ownership and title thereto, subject to the proviso in Section 8.2 hereof, and Executive will otherwise reasonably cooperate in all proceedings and matters relating thereto. Executive shall be compensated at a rate of $250 per hour for any actions she is required to take pursuant to this Section 8.3 after the Term.

8.4     Records. Executive will keep complete and accurate accounts, notes, data and records of all Developments in the manner and form reasonably requested by the Company in writing. Such accounts, notes, data and records shall be the property of the Company, subject to the proviso in Section 8.2 hereof, and, upon written request by the Company, Executive will promptly surrender the same to it.

8.5     Obligations, Restrictions and Limitations. Executive understands that the Company may enter into agreements or arrangements with agencies of the United States Government and that the Company may be subject to laws and regulations which impose obligations, restrictions and limitations on it with respect to inventions and patents which may be acquired by it or which may be conceived or developed by employees, consultants or other agents rendering services to it. Executive agrees that she shall be bound by all such obligations, restrictions and limitations applicable to any such invention conceived or developed by him during the Term and shall take any reasonable action which may be required to discharge such obligations and to comply with such restrictions and limitations.

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9.     Non-solicitation Covenant.

9.1     Non-solicitation and Noninterference. For a period of two years following termination of this Agreement, Executive shall not (a) induce or attempt to induce any employee of the Company to leave the employ of the Company, (b) induce or attempt to induce any employee of the Company to work for, render services or provide advice to or supply confidential business information or Trade Secrets of the Company to any third person, firm or corporation, or (c) induce or attempt to induce any customer, supplier, licensee, licensor or other business relation of the Company to cease doing business with the Company, provided, that advertisements and general solicitations shall not constitute a breach of this Section 9.1.

9.2     Indirect Solicitation. Executive agrees that, during the period covered by Section 9.1 hereof, she will not, directly or indirectly, assist or encourage any other person in carrying out, directly or indirectly, any activity that would be prohibited by the provisions of Section 9.1 if such activity were carried out by Executive, either directly or indirectly; and, in particular, Executive agrees that she will not, directly or indirectly, induce any employee of the Company to carry out, directly or indirectly, any such activity.

10.     Injunctive Relief. Executive hereby recognizes, acknowledges and agrees that in the event of any breach by Executive of any of her covenants, agreements, duties or obligations contained in Sections 6, 7, 8 and 9 of this Agreement, the Company would suffer great and irreparable harm, injury and damage, the Company would encounter extreme difficulty in attempting to prove the actual amount of damages suffered by the Company as a result of such breach, and the Company would not be reasonably or adequately compensated in damages in any action at law. Executive therefore covenants and agrees that, in addition to any other remedy the Company may have at law, in equity, by statute or otherwise, in the event of any breach by Executive of any of her covenants, agreements, duties or obligations contained in Sections 6, 7, 8 and of this Agreement, the Company shall be entitled to seek and receive temporary, preliminary and permanent injunctive and other equitable relief from any court of competent jurisdiction to enforce any of the duties or obligations contained in Sections 6, 7, 8 and 9 of this Agreement without the necessity of proving the amount of any actual damage to the Company or any affiliate thereof resulting therefrom; provided, however, that nothing contained in this Section 10 shall be deemed or construed in any manner whatsoever as a waiver by the Company of any of the rights which the Company may have against Executive at law, in equity, by statute or otherwise arising out of, in connection with or resulting from the breach by Executive of any of her covenants, agreements, duties or obligations hereunder.

11.     Code Section 409A. Certain amounts under this Agreement may constitute “nonqualified deferred compensation” which are intended to comply with the requirements of Section 409A of the Code. To the extent that the parties reasonably determine that any compensation or benefits payable under this Agreement are subject to Section 409A of the Code, this Agreement shall incorporate the terms and conditions required by Section 409A of the Code and Department of Treasury regulations as reasonably determined by the Company and the Executive. To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretative guidance issued thereunder. In the event that following the Effective Date, the Company and the Executive reasonably determine that any compensation or benefits payable under this Agreement may be subject to Section 409A of the Code and related Department of Treasury guidance, the Company and the Executive shall work together to adopt such amendments to this Agreement or adopt other policies or procedures (including amendments, policies and procedures with retroactive effective), or take any other commercially reasonable actions necessary or appropriate to (a) exempt the compensation and benefits payable under this Agreement from Section 409A of the Code and/or preserve the intended tax treatment of the compensation and benefits provided with respect to this Agreement, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance.

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12.     Code Section 280G. If any payment or benefit received or to be received by Executive in connection with a “change in ownership or control” of the Company (within the meaning of Section 280G of the Code), whether payable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or an affiliate of the Company (the “Payments”), would constitute a “parachute payment” within the meaning of Section 280G of the Code, the Payments shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code but only if, by reason of such reduction, the net after-tax benefit to Executive shall exceed the net after-tax benefit to Executive if no such reduction was made. For purposes of this Section 12, “net after-tax benefit” shall mean (i) the total of all payments and the value of all benefits which Executive receives or is then entitled to receive from the Company that would constitute “parachute payments” within the meaning of Section 280G of the Code, less (ii) the amount of all federal, state and local income taxes payable with respect to the foregoing calculated at the maximum marginal income tax rate for each year in which the foregoing shall be paid to Executive (based on the rate in effect for such year as set forth in the Code as in effect at the time of the first payment of the foregoing), less (iii) the amount of excise taxes imposed with respect to the payments and benefits described in (i) above by Section 4999 of the code. The foregoing determination will be made by a nationally recognized accounting firm (the “Accounting Firm”) selected by Executive and reasonably acceptable to the Company, provided, that the Accounting Firm’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code. The Accounting Firm shall provide Executive and the Company with its determinations and detailed supporting calculations with respect thereto at least 15 business days prior to the date on which Executive would be entitled to receive a Payment (or as soon as practicable in the event that the Accounting Firm has less than 15 business days advance notice that Executive may receive a Payment) in order that Executive may determine whether it is in Executive’s best interest to waive the receipt of any or all amounts which may constitute “excess parachute payments.” If the Accounting Firm determines that such reduction is required by this Section 12, Executive, in her sole and absolute discretion, may determine which of the Payments shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code, and the Company shall pay such reduced amount to Executive. Executive and the Company shall each provide the Accounting Firm access to and copies of any books, records, and documents in the possession of Executive or the Company, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determinations and calculations contemplated by this Section 12. The first $10,000 of fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by this Section 12 will be borne exclusively by the Company, and the balance of any such fees and expenses, if any shall be borne exclusively by Executive.

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13.     Miscellaneous.

13.1     Arbitration. The parties agree that they will use their best efforts to amicably resolve any dispute arising out of or relating to this Agreement. Any controversy, claim or dispute that cannot be so resolved shall be settled by final, binding arbitration in accordance with the rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. Any such arbitration shall be conducted in Los Angeles County or Ventura County, California, or such other place as may be mutually agreed upon by the parties. Within fifteen (15) days after the commencement of the arbitration, each party shall select one person to act as an arbitrator, and the two arbitrators so selected shall select a third arbitrator within ten (10) days of their appointment. Each party shall bear its own costs and expenses and an equal share of the arbitrator’s expenses and administrative fees of arbitration.

13.2     Attorneys’ Fees. If any legal action is brought for the enforcement of this Agreement, or because of an alleged dispute, breach or default in connection with or arising out of any of the provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which such party or parties may be entitled.

13.3     Notices. All notices, requests and other communications (collectively, “Notices”) given pursuant to this Agreement shall be in writing, and shall be delivered by fax, email, personal service, reputable overnight carrier or by United States first class, registered or certified mail (return receipt requested), postage prepaid, addressed to the party at the address set forth below:

If to Company:

Talon International, Inc.

21900 Burbank Boulevard, Suite 270

Woodland Hills, CA 91367

Attn: Chief Executive Officer

Fax: 818-444-4146

ldyne@talonzippers.com

If to Executive, at the address, fax or email maintained for Executive in the Company’s payroll records.

Any Notice shall be deemed duly given when received by the addressee thereof, provided that any Notice sent by registered or certified mail shall be deemed to have been duly given three days from date of deposit in the United States mails, unless sooner received. Either party may from time to time change its address for further Notices hereunder by giving Notice to the other party in the manner prescribed in this section.

13.4     Entire Agreement. This Agreement contains the sole and entire agreement and understanding of the parties with respect to the entire subject matter of this Agreement, and any and all prior agreements, discussions, negotiations, commitments and understandings, whether oral or otherwise, related to the subject matter of this Agreement are hereby merged herein. No representations, oral or otherwise, express or implied, other than those contained in this Agreement have been relied upon by any party to this Agreement.

10

13.5     Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

13.6     Indemnification: Insurance. The Company shall defend, indemnify and hold Executive harmless from any and all liabilities, obligations, claims or expenses which arise in connection with or as a result of Executive’s service as an officer or director of the Company to the greatest extent now provided in the Company’s Articles and Bylaws and as otherwise allowed by law. During the Term and for a period of at least six years thereafter, Executive shall be entitled to the same directors and officers’ liability insurance coverage that the Company provides generally to its other directors and officers, as may be amended from time to time for such directors and officers.

13.7     Amendment. The terms of this Agreement may not be amended or modified other than by a written instrument executed by the parties hereto or their respective successors.

13.8     Waiver. Failure by any party hereto to insist upon strict compliance with any provision of this Agreement or to assert any right such party may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

13.9     Assignment. This Agreement is binding on and for the benefit of the parties hereto and their respective successors, heirs, executors, administrators and other legal representatives.

13.10     Captions. The various captions of this Agreement are for reference only and shall not be considered or referred to in resolving questions of interpretation of this Agreement.

13.11     Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

13.12     Business Day. If the last day permissible for delivery of any Notice under any provision of this Agreement, or for the performance of any obligation under this Agreement, shall be other than a business day, such last day for such Notice or performance shall be extended to the next following business day (provided, however, under no circumstances shall this provision be construed to extend the date of termination of this Agreement).

(Signatures on Following Page)

11

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

Company:	Executive:
TALON INTERNATIONAL, INC.
By: /s/ Larry Dyne	/s/ Nancy Agger-Nielsen
Larry Dyne        Chief Executive Officer	Nancy Agger-Nielsen

S-1

EXHIBIT A

Annual Bonus

Commencing with fiscal year 2015 and for each fiscal year during the Term thereafter during which Executive is performing services for the Company and is employed on December 31 of that fiscal year, Executive shall be eligible to earn a cash bonus, referred to herein as the Annual Bonus. The Annual Bonus, if any, shall be payable in cash on or about April 15 of the year immediately following the fiscal year for which such Annual Bonus is calculated.

The Annual Bonus shall be an amount determined by reference to Executive’s achievement of performance objectives established by the Board for each fiscal year. The performance objectives for fiscal year 2015 are set forth in this Exhibit A.

For purposes hereof and subject to the terms of this Exhibit A, “Adjusted EBITDA” means earnings before interest, taxes, depreciation and amortization, and stock-based compensation expense, calculated based on the Company’s audited consolidated financial statements for the applicable fiscal year in question prepared in accordance with generally accepted accounting principles in the United States. Adjusted EBTIDA will be calculated after taking into account the Annual Bonus and any other management incentive cash bonuses.

For fiscal year 2015, Executive shall be entitled to an Annual Bonus, if any, equal to a percentage of the Executive’s Annual Base Salary for such fiscal year, determined by multiplying the Executive’s Maximum Bonus Opportunity for such fiscal year by the Executive’s cumulative achievement of the Bonus Weightings for the Performance Objectives for such fiscal year, which cumulative achievement will be determined by the Board of Directors (or a committee of the Board) based on Executive’s achievement of the individual performance objectives for such fiscal year set forth below. The Board’s determination of Executive’s achievement of an individual performance objective score will either be objective based upon measured financial results and application of the Performance Ranges set forth below or at the discretion of the Board based upon the Board’s subjective analysis.

Maximum Bonus Opportunity for Fiscal Year 2015:     50% of Annual Base Salary

Performance Objectives and Weightings:

Performance Objectives	Determination Method		Plan		Bonus Weighting
Financial Objectives
Revenue	Financial Results	$	53,835,000		10%
Gross profit %	Financial Results		31.9	%	14%
Adjusted EBITDA	Financial Results	$	2,853,000		28%
Strategic Objectives
New Major Brands / Worldwide revenue growth	BOD Discretion		N/A		3%
Completion of financing arrangements	BOD Discretion		N/A		15%
Improvement of Financial Data - Divisional P&L, Financial Analysis, Etc.	BOD Discretion		N/A		15%
Fill Key Management Positions	BOD Discretion		N/A		4%
Shareholder Initiatives	BOD Discretion		N/A		8%
Technology - Website and Social Media Upgrades / Implementation	BOD Discretion		N/A		3%

Exhibit A-1

Financial Results Performance Ranges:

Performance Range (Actual Compared to Plan)	Achievement of Bonus Weighting
100% or Greater	100%
90% and Less Than 100%	75%
80% and Less Than 90%	45%
75% and Less Than 80%	25%
Less Than 75%	BOD Discretion

Exhibit A-2

EXHIBIT B

Release

[TALON INTERNATIONAL, INC. LETTERHEAD]

RELEASE

[DATE]

EMPLOYEE NAME
ADDRESS

Re:     Separation Terms and General Release Agreement

Dear [NAME]:

This letter confirms the terms of your separation from the employment of Talon International, Inc. and consideration in exchange for your waiver and general release of claims in favor of Talon International, Inc. and its officers, directors, employees, agents, representatives, subsidiaries, divisions, affiliated companies, successors, and assigns (collectively, the “Company” or “TLN”).

1.     Termination Date. Your employment with the Company will end effective _____________ (the “Termination Date”). Between now and the Termination Date, you should assist with any transition-related activities as directed by the employee to whom you directly report.

2.     Acknowledgment of Payment of Wages. On or before execution of this release, we delivered to you a final paycheck that includes payment for all accrued wages, salary, accrued and unused vacation time, reimbursable expenses, and any similar payments due and owing to you from the Company as of the Termination Date (collectively referred to as “Wages”). You are entitled to these Wages regardless of whether you sign this Separation Terms and General Release Agreement (the “Agreement”).

3.     Consideration For Release. In consideration of the waiver and release of claims set forth in Paragraphs 7 and 8 below, and in exchange for your signing this Agreement, the Company agrees to provide you with the post-termination payments (the “Severance Payments”) described in Section 5 of that certain Executive Employment Agreement, dated [_________], 2015. The Severance Payments are in addition to any amounts owed to you by the Company. You acknowledge and agree that you are not otherwise entitled to receive the Severance Payments. You understand that if you do not sign the Agreement, or if you revoke the signed Agreement as described in Paragraph 19 below (if applicable), the Company has no obligation to provide you with the Severance Payments.

4.     COBRA Continuation Coverage. Your Company provided health coverage will end on your Termination Date. If you are eligible for, and timely elect COBRA continuation, you may continue health coverage pursuant to the terms and conditions of COBRA at your own expense, unless the Company has agreed to pay for such coverage as part of your Severance Payments. Our Human Resources Department will contact you shortly after your Termination Date. All other insured benefit coverage (e.g., life insurance, disability insurance) will also end on your Termination Date, unless the Company has agreed to pay for such coverage as part of your Severance Payments.

Exhibit B-1

5.     Return of Company Property. By signing below, you represent that you have returned all the Company property and data of any type whatsoever that was in your possession or control.

6.     Confidential Information. You hereby acknowledge that as a result of your employment with the Company you have had access to the Company’s confidential information. You acknowledge your continuing obligations under any proprietary information and inventions agreement you have previously executed, and you agree you will hold all such confidential information in strictest confidence and that you may not make any use of such confidential information. You further confirm that you have delivered to the Company all documents and data of any nature containing or pertaining to such confidential information and that you have not taken with you any such documents or data or any copies thereof.

7.     General Release and Waiver of Claims.

7.1.     The payments and agreements set forth in this Agreement fully satisfy any and all accrued salary, vacation pay, bonus and commission pay, stock-based compensation, profit sharing, termination benefits or other compensation to which you may be entitled by virtue of your employment with the Company or your termination of employment. You acknowledge that you have no claims and have not filed any claims against the Company based on your employment with or the separation of your employment with the Company.

7.2.     To the fullest extent permitted by law, you hereby release and forever discharge the Company, its successors, subsidiaries and affiliates, directors, shareholders, current and former officers, agents and employees (all of whom are collectively referred to as “Releasees”) from any and all existing claims, demands, causes of action, damages and liabilities, known or unknown, that you ever had, now have or may claim to have had arising out of or relating in any way to your employment or separation from employment with the Company including, without limitation, claims based on any oral, written or implied employment agreement, claims for wages, bonuses, commissions, stock-based compensation, expense reimbursement, and any claims that the terms of your employment with the Company, or the circumstances of your separation, were wrongful, in breach of any obligation of the Company or in violation of any of your rights, contractual, statutory or otherwise. Each of the Releasees is intended to be a third party beneficiary of the General Release and Waiver of Claims set forth in this Paragraph 7.

(a)     Release of Statutory and Common Law Claims. Such rights include, but are not limited to, your rights under the following federal and state statutes: the Employee Retirement Income Security Act (ERISA) (regarding employee benefits); the Occupational Safety and Health Act (safety matters); the Family and Medical Leave Act of 1993; the Worker Adjustment and Retraining Act (“WARN”) (notification requirements for employers who are curtailing or closing an operation) and common law; tort; wrongful discharge; public policy; workers’ compensation retaliation; tortious interference with contractual relations, misrepresentation, fraud, loss of consortium; slander, libel, defamation, intentional or negligent infliction of emotional distress; claims for wages, bonuses, commissions, stock-based compensation or fringe benefits; vacation pay; sick pay; insurance reimbursement, medical expenses, and the like.

Exhibit B-2

(b)     Release of Discrimination Claims. You understand that various federal, state and local laws prohibit age, sex, race, disability, benefits, pension, health and other forms of discrimination, harassment and retaliation, and that these laws can be enforced through the U.S. Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor, and similar state and local agencies and federal and state courts. You understand that if you believe your treatment by the Company violated any laws, you have the right to consult with these agencies and to file a charge with them. Instead, you have decided voluntarily to enter into this Agreement, release the claims and waive the right to recover any amounts to which you may have been entitled under such laws, including but not limited to, any claims you may have based on age or under the Age Discrimination in Employment Act of 1967 (ADEA; 29 U.S.C. Section 621 et. seq.) (age); the Older Workers Benefit Protection Act (“OWBPA”) (age); Title VII of the Civil Rights Act of 1964 (race, color, religion, national origin or sex); the 1991 Civil Rights Act; the Vocational Rehabilitation Act of 1973 (disability); The Americans with Disabilities Act of 1990 (disability); 42 U.S.C. Section 1981, 1986 and 1988 (race); the Equal Pay Act of 1963 (prohibits pay differentials based on sex); the Immigration Reform and Control Act of 1986; Executive Order 11246 (race, color, religion, sex or national origin); Executive Order 11141 (age); Vietnam Era Veterans Readjustment Assistance Act of 1974 (Vietnam era veterans and disabled veterans); and California state statutes and local laws of similar effect.

7.3.     Releasees and you do not intend to release claims (i) which you may not release as a matter of law (including, but not limited to, indemnification claims under applicable law); (ii) for unemployment, state disability and/or paid family leave insurance benefits pursuant to the terms of applicable state law; (iii) for any benefit entitlements that are vested as of the Termination Date pursuant to the terms of a Company-sponsored benefit plan governed by the federal law known as “ERISA”; and (iv) for vested stock and/or vested option shares pursuant to the written terms and conditions of your existing stock and stock option grants and agreements existing as of the Termination Date. To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be determined by an arbitrator under the procedures set forth in paragraph 12.

8.     Waiver of Unknown Claims. You expressly waive any benefits of Section 1542 of the Civil Code of the State of California (and any other laws of similar effect), which provides:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

Exhibit B-3

9.     Covenant Not to Sue.

9.1.     To the fullest extent permitted by law, you agree that you will not now or at any time in the future pursue any charge, claim, or action of any kind, nature and character whatsoever against any of the Releasees, or cause or knowingly permit any such charge, claim or action to be pursued, in any federal, state or municipal court, administrative agency, arbitral forum, or other tribunal, arising out of any of the matters covered by paragraphs 7 and 8 above.

9.2.     You further agree that you will not pursue, join, participate, encourage, or directly or indirectly assist in the pursuit of any legal claims against the Releasees, whether the claims are brought on your own behalf or on behalf of any other person or entity.

9.3.     Nothing in this paragraph shall prohibit you from: (1) providing truthful testimony in response to a subpoena or other compulsory legal process, and/or (2) filing a charge or complaint with a government agency such as the Equal Employment Opportunity Commission, the National Labor Relations Board or applicable state anti-discrimination agency.

10.     Non-disparagement. You agree that you will not make any statement, written or oral, or engage in any conduct that is or could reasonably be construed to be disparaging of the Company or its products, services, agents, representatives, directors, officers, shareholders, attorneys, employees, vendors, affiliates, successors or assigns, or any person acting by, through, under or in concert with any of them. Nothing in this paragraph shall prohibit you from providing truthful testimony in response to a subpoena or other compulsory legal process.

11.     Legal and Equitable Remedies. You and the Company agree that either party shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief without prejudice to any other rights or remedies that either party may have at law or in equity for breach of this Agreement.

12.     Arbitration of Disputes. Except for claims for injunctive relief arising out of a breach of any proprietary information and inventions agreement you have executed in favor of the Company, you and the Company agree to submit to mandatory binding arbitration any future disputes between you and the Company, including any claim arising out of or relating to this Agreement. By signing below, you and the Company waive any rights you and the Company may have to trial by jury of any such claims. You agree that the American Arbitration Association will administer any such arbitration(s) under its National Rules for the Resolution of Employment Disputes, with administrative and arbitrator’s fees to be borne by the Company. The arbitrator shall issue a written arbitration decision stating her or her essential findings and conclusions upon which the award is based. A party’s right to review of the decision is limited to the grounds provided under applicable law. The parties agree that the arbitration award shall be enforceable in any court having jurisdiction to enforce this Agreement. This Agreement does not extend or waive any statutes of limitations or other provisions of law that specify the time within which a claim must be brought. Notwithstanding the foregoing, each party retains the right to seek preliminary injunctive relief in a court of competent jurisdiction to preserve the status quo or prevent irreparable injury before a matter can be heard in arbitration.

Exhibit B-4

13.     Attorneys’ Fees. If any legal action arises or is brought to enforce the terms of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys’ fees, costs and expenses from the other party, in addition to any other relief to which such prevailing party may be entitled, except where the law provides otherwise. The costs and expenses that may be recovered exclude arbitration fees pursuant to paragraph 12 above.

14.     Confidentiality Provision. You agree to keep the contents, terms and conditions of this Agreement confidential and not disclose them except to your spouse or domestic partner, attorneys, accountant or as required by subpoena or court order.

15.     Materiality of Breach. Any breach of the provisions contained in paragraphs 6 through 10 and/or 14 will be deemed a material breach of this Agreement.

16.     No Admission of Liability. You agree that this Agreement is not an admission or evidence of any wrongdoing or liability on the part of the Company, its representatives, attorneys, agents, partners, officers, shareholders, directors, employees, subsidiaries, affiliates, divisions, successors or assigns. This Agreement will be afforded the maximum protection allowable under California Evidence Code Section 1152 and/or any other state or Federal provisions of similar effect.

17.     Indemnification. This Release shall not apply with respect to any claims arising under your existing rights to indemnification and defense pursuant to (a) the articles and bylaws of the Company for acts as a director and/or officer, (b) any indemnification agreement with the Company, or (c) your rights of insurance under any director and officer liability policy in effect covering the Company’s directors and officers.

18.     Review of Agreement. You may not sign this Agreement prior to your Termination Date. You may take up to twenty-one (21) days from the date you receive this Agreement, or until your Termination Date, whichever date is later, to consider this Agreement and release and, by signing below, affirm that you were advised by this letter to consult with an attorney before signing this Agreement and were given ample opportunity to do so. You understand that this Agreement will not become effective until you return the original properly signed Agreement to the Company, Attention: Human Resources Department, at the Company’s principal executive offices in Los Angeles, California, and after expiration of the revocation period without revocation by you.

[IF EMPLOYEE IS OVER 40 AT THE TIME OF TERMINATION, THE FOLLOWING SECTION 19 APPLIES:

19.     Revocation of Agreement. You acknowledge and understand that you may revoke this Agreement by faxing a written notice of revocation to the Company, Attention: Human Resources Department, at (818) 444-4108 any time up to seven (7) days after you sign it. After the revocation period has passed, however, you may no longer revoke your Agreement.

IF EMPLOYEE IS UNDER 40 AT THE TIME OF TERMINATION, THE FOLLOWING SECTION 19 APPLIES:

19.     Intentionally Omitted.]

Exhibit B-5

20.     Entire Agreement. This Agreement together with any proprietary information and inventions agreement you have executed in favor of the Company is the entire agreement between you and the Company with respect to the subject matter of this Agreement and supersedes all prior negotiations and agreements, whether written or oral, relating to this subject matter. You acknowledge that none of the Company, its agents or attorneys made any promise or representation, express or implied, written or oral, not contained in this Agreement to induce you to execute this Agreement. You acknowledge that you have signed this Agreement knowingly, voluntarily and without coercion, relying only on such promises, representations and warranties as are contained in this document. You understand that you do not waive any right or claim that may arise after the date this Agreement is executed.

21.     Modification. By signing below, you acknowledge your understanding that this Agreement may not be altered, amended, modified, or otherwise changed in any respect except by another written agreement that specifically refers to this Agreement, executed by the Company’s authorized representatives and you.

22.     Governing Law. This Agreement is governed by, and is to be interpreted according to, the laws of the State of California.

23.     Savings and Severability Clause. Should any court, arbitrator or government agency of competent jurisdiction declare or determine any of the provisions of this Agreement to be illegal, invalid or unenforceable, the remaining parts, terms or provisions shall not be affected thereby and shall remain legal, valid and enforceable. Further, it is the intention of the parties to this Agreement that, if a court, arbitrator or agency concludes that any claim under paragraph 7 above may not be released as a matter of law, the General Release in paragraph 7 and the Waiver Of Unknown Claims in paragraph 8 shall otherwise remain effective as to any and all other claims.

If this Agreement accurately sets forth the terms of your separation from the Company and if you voluntarily agree to accept the terms of the severance package offered please sign below no earlier than your Termination Date and return it to the Company’s Human Resources Department.

PLEASE REVIEW CAREFULLY. THIS AGREEMENT CONTAINS
A GENERAL RELEASE OF KNOWN AND UNKNOWN CLAIMS.

Sincerely,

[NAME]

REVIEWED, UNDERSTOOD AND AGREED:

By:                                                                                
           [NAME]
Date:                                                                            

DO NOT SIGN PRIOR TO YOUR TERMINATION DATE

Exhibit B-6

EX-10.28

Exhibit 10.28

Larry Dyne
2015 Annual Bonus

Reference is made to that certain Executive Employment Agreement, dated July 30, 2010, between Talon International, Inc. (the “Company”) and Larry Dyne (“Executive”), as amended to date (as amended, the “Agreement”). This document sets forth Executive annual bonus opportunity for fiscal year 2015, as contemplated by Exhibit A to the Agreement.

For fiscal year 2015, Executive shall be eligible to earn a cash bonus, referred to herein as the Annual Bonus. The Annual Bonus, if any, shall be payable in cash on or about April 15 of the year immediately following the fiscal year for which such Annual Bonus is calculated.

The Annual Bonus shall be an amount determined by reference to Executive’s achievement of performance objectives established by the Board. The performance objectives for fiscal year 2015 are set forth herein.

For purposes hereof and subject to the terms hereof, “Adjusted EBITDA” means earnings before interest, taxes, depreciation and amortization, and stock-based compensation expense, calculated based on the Company’s audited consolidated financial statements for the applicable fiscal year in question prepared in accordance with generally accepted accounting principles in the United States. Adjusted EBTIDA will be calculated after taking into account the Annual Bonus and any other management incentive cash bonuses.

For fiscal year 2015, Executive shall be entitled to an Annual Bonus, if any, equal to a percentage of the Executive’s Annual Base Salary for such fiscal year, determined by multiplying the Executive’s Maximum Bonus Opportunity for such fiscal year by the Executive’s cumulative achievement of the Bonus Weightings for the Performance Objectives for such fiscal year, which cumulative achievement will be determined by the Board of Directors (or a committee of the Board) based on Executive’s achievement of the individual performance objectives for such fiscal year set forth below. The Board’s determination of Executive’s achievement of an individual performance objective score will either be objective based upon measured financial results and application of the Performance Ranges set forth below or at the discretion of the Board based upon the Board’s subjective analysis.

Maximum Bonus Opportunity for Fiscal Year 2015:     100% of Annual Base Salary

Performance Objectives and Weightings:

Performance Objectives	Determination Method		Plan		Bonus Weighting
Financial Objectives
Revenue	Financial Results	$	53,835,000		12%
Gross profit %	Financial Results		31.9	%	10%
Adjusted EBITDA	Financial Results	$	2,853,000		25%
Strategic Objectives
New Major Brands / Worldwide revenue growth	BOD Discretion		N/A		13%
Tekfit Customer Deals	BOD Discretion		N/A		12%
Tekfit Management – Finished Component vs. Machine Deployed	BOD Discretion		N/A		4%
Fill Key Management Positions	BOD Discretion		N/A		5%
Fill Key Sales Positions	BOD Discretion		N/A		6%
Shareholder Initiatives	BOD Discretion		N/A		2%
Zipper Mfg. – Delivery & Supply Chain Improvements	BOD Discretion		N/A		4%
Trim – Increased Sales / Improved Results	BOD Discretion		N/A		2%
Global Expansion of Sourcing - India / Cambodia / Etc.	BOD Discretion		N/A		5%

1

Financial Results Performance Ranges:

Performance Range (Actual Compared to Plan)	Achievement of Bonus Weighting
100% or Greater	100%
90% and Less Than 100%	75%
80% and Less Than 90%	45%
75% and Less Than 80%	25%
Less Than 75%	BOD Discretion

2 

EX-31.1

Exhibit 31.1

Certification of CEO Pursuant to
Securities Exchange Act Rules 13a-14 and 15d-14
as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Larry Dyne, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Talon International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 12, 2015	/s/ Larry Dyne
	Larry Dyne
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of CFO Pursuant to
Securities Exchange Act Rules 13a-14 and 15d-14
as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Nancy Agger-Nielsen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Talon International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 12, 2015	/s/ Nancy Agger-Nielsen
	Nancy Agger-Nielsen
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2015 (the "Report") by Talon International, Inc. ("Registrant"), each of the undersigned hereby certifies that:

1. to the best of my knowledge, the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. to the best of my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.

Dated: November 12, 2015	/s/ Larry Dyne
	Larry Dyne
	Chief Executive Officer

/s/ Nancy Agger-Nielsen

Nancy Agger-Nielsen

Chief Financial Officer

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Note 10 - Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Note 10 - Income Taxes (Details) [Line Items]
Income Tax Expense (Benefit)	$ (8,431)	$ 161,165	$ 128,746	$ 732,299
Deferred Tax Assets, Net of Valuation Allowance	6,143,193		6,143,193		$ 6,120,838
Deferred Tax Liabilities, Net, Noncurrent	7,318		7,318		13,961
Prepaid Expenses and Other Current Assets [Member]
Note 10 - Income Taxes (Details) [Line Items]
Income Taxes Receivable	8,503		8,503		66,270
Accrued Expenses [Member]
Note 10 - Income Taxes (Details) [Line Items]
Accrued Income Taxes, Current	$ 184,734		$ 184,734		$ 78,455

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Note 9 - Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Number of Shares			Weighted Average Exercise Price
Employees and Directors
Options outstanding - January 1, 2015		9,747,767		$	0.20
Granted		400,000		$	0.17
Exercised		-		$	-
Cancelled		(1,832,500	)	$	0.28
Options outstanding - June 30, 2015		8,315,267		$	0.19
Granted		300,000		$	0.12
Exercised		-		$	-
Cancelled		(130,000	)	$	0.19
Options outstanding - September 30, 2015		8,485,267		$	0.18
Non Employees
Warrants outstanding – January 1, 2015 and June 30, 2015		-		$	-
Granted		1,000,000		$	0.18
Exercised		-		$	-
Cancelled		-		$	-
Warrants outstanding - September 30, 2015		1,000,000		$	0.18

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Note 12 - Segment Reporting and Geographic Information (Details) - Long-Lived Assets by Location - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Long-lived Assets:
Long-lived assets - geographical	$ 5,060,589	$ 4,884,670
Geography Eliminations [Member] | UNITED STATES
Long-lived Assets:
Long-lived assets - geographical	4,785,588	4,554,831
Geography Eliminations [Member] | CHINA
Long-lived Assets:
Long-lived assets - geographical	172,746	178,873
Geography Eliminations [Member] | HONG KONG
Long-lived Assets:
Long-lived assets - geographical	$ 102,255	$ 150,966

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Note 9 - Stock-Based Compensation (Details) - USD ($)						3 Months Ended		6 Months Ended	9 Months Ended
	Aug. 10, 2015	Jan. 30, 2014	Aug. 30, 2011	Aug. 30, 2010	Jul. 30, 2010	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Nov. 08, 2013	Nov. 19, 2010	Nov. 18, 2010
Note 9 - Stock-Based Compensation (Details) [Line Items]
Proceeds from Stock Options Exercised (in Dollars)										$ 29,709
Options Issued To Employees And Directors [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross						300,000	3,645,000	400,000	700,000	4,045,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)						$ 410,288	$ 769,045		$ 410,288	$ 769,045
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition									2 years 328 days	3 years 262 days
Restricted Stock Units (RSUs) [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)						$ 0			$ 0		$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other Than Options, Shares Deferred In Period				5,434,200
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period									0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number						0			0		0
Restricted Stock Units (RSUs) [Member] | Lonnie Schnell and Larry Dyne [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					5,778,500
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			10.00%
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instrument Other Than Options, Grant Date Value (in Dollars)					$ 2,263,884
Restricted Stock Units (RSUs) [Member] | Common Stock [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures		610,894
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures, Shares Retained in Payment of Tax		544,806
The 2008 Stock Plan [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized												15,000,000	4,810,000	2,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period						0	0		0	277,084
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share)										$ 0.11
Proceeds from Stock Options Exercised (in Dollars)										$ 29,709
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value (in Dollars per share)										$ 0.23
The 2007 Stock Plan [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized						2,600,000			2,600,000
2007 and 2008 Stock Incentive Plans [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period										186,458
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Shares Retained in Lieu of Cash										148,820
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share)										$ 0.18
Share Based Compensation Arrangement By Share Based Payment Award, Options, Exercise Date, Intrinsic Value, Per Share (in Dollars per share)										$ 0.27
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Shares Retained in Lieu of Cash, Intrinsic Value (in Dollars)										$ 40,181
August 30, 2011 [Member] | Restricted Stock Units (RSUs) [Member] | Lonnie Schnell and Larry Dyne [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			50.00%
Princess Investment Warrant [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	1,000,000
Class of Warrant or Right, Warrant Term	5 years
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)	$ 0.18
Maximum [Member]
Note 9 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period									4 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term									10 years

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Note 3 - New Accounting Pronouncements

9 Months Ended

Sep. 30, 2015

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Note 3.     New Accounting Pronouncements

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, to reduce the complexity in accounting for inventory. This ASU requires entities to measure inventory at the lower of cost or net realizable value, replacing the market value approach that required floor and ceiling considerations.  This guidance for public entities is effective for fiscal years beginning after December 15, 2016, with early adoption permitted.  We are in the process of evaluating the adoption of this ASU, but do not expect this to have a material effect on our financial position, results of operations or cash flows. 

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). The amendment simplifies debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction of the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendment. ASU 2015-03 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning December 15, 2015. Other than reclassification of debt issuance costs net of amortization from assets to liabilities, no other effect is expected to be included on the Company’s financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The effective date for the ASU 2014-09 is deferred by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” to annual reporting periods beginning after December 15, 2018. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new standard will replace most existing revenue recognition guidance in U.S. GAAP. The standard permits the use of either the retrospective or cumulative effect transition method. The Company does not expect that the adoption of this pronouncement will have a material impact on its Consolidated Financial Statements.

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Note 2 - Summary of Significant Accounting Policies (Details) - Intangible Assets (Parentheticals)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Minimum [Member]
Note 2 - Summary of Significant Accounting Policies (Details) - Intangible Assets (Parentheticals) [Line Items]
Finite Lived Intangible Assets, Useful Life	10 years	10 years
Maximum [Member]
Note 2 - Summary of Significant Accounting Policies (Details) - Intangible Assets (Parentheticals) [Line Items]
Finite Lived Intangible Assets, Useful Life	17 years	17 years

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Note 2 - Summary of Significant Accounting Policies (Details) - Intangible Assets - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Note 2 - Summary of Significant Accounting Policies (Details) - Intangible Assets [Line Items]
Tradename - Talon trademark	$ 4,110,751	$ 4,110,751
Intellectual property rights	247,677	224,779
Less: Accumulated amortization (10 to 17 years)	(45,259)	(35,446)
Intellectual property rights, net	202,418	189,333
Intangible assets, net	$ 4,313,169	$ 4,300,084

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Note 4 - Net Income (Loss) Per Share (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Warrant [Member]
Note 4 - Net Income (Loss) Per Share (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)	1,000,000		1,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.18		$ 0.18
Employee And Board Member Stock Options [Member]
Note 4 - Net Income (Loss) Per Share (Details) [Line Items]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit		$ 0.04	0.04	$ 0.04
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit		$ 0.20	$ 0.11	$ 0.20
Incremental Common Shares Attributable to Dilutive Effect of Equity Unit Purchase Agreements (in Shares)		5,066,667	2,691,667	5,066,667
Employee And Board Member Stock Options [Member] | Stock Compensation Plan [Member]
Note 4 - Net Income (Loss) Per Share (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)	8,485,287	4,683,600	5,793,600	4,683,600
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit	$ 0.04	$ 0.21	$ 0.11	$ 0.21
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit	$ 1.33	$ 5.23	$ 1.33	$ 5.23

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Note 4 - Net Income (Loss) Per Share (Details) - Reconciliation of the Numerators and Denominators of the Basic and Diluted Net Income/Loss Per Share - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Basic net loss -
Net income (loss) basic (in Dollars)	$ (90,353)	$ 57,086	$ 198,931	$ 888,826
Shares basic	92,267,831	92,267,831	92,267,831	92,115,167
Per share amount basic (in Dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ 0.01
Effect of Dilutive Securities -
Shares diluted		2,163,340	1,252,061	2,295,869
Per share amount diluted		0.00	0.00	0.00
Net income (loss) diluted (in Dollars)	$ (90,353)	$ 57,086	$ 198,931	$ 888,826
Shares diluted	92,267,831	94,431,171	93,519,892	94,411,036
Per share amount diluted (in Dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ 0.01

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Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2.     Summary of Significant Accounting Policies

A complete description of the Company’s Significant Accounting Policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and should be read in conjunction with these unaudited consolidated financial statements. The Significant Accounting Policies noted below are only those policies that have changed materially or have supplemental information included for the periods presented here.

Allowance for Accounts Receivable Doubtful Accounts

The Company is required to make judgments as to the collectibility of accounts receivable based on established aging policy, historical experience and future expectations. The allowances for doubtful accounts represent allowances for customer trade accounts that are estimated to be partially or entirely uncollectible. These allowances are used to reduce gross trade receivables to their net realizable value. The Company records these allowances based on estimates related to the following factors: (i) customer specific allowances; (ii) amounts based upon an aging schedule; and (iii) an estimated amount, based on the Company’s historical experience, for issues not yet identified. Bad debt expense (recoveries), net for the three and nine months ended September 30, 2015 were $7,487 and $(7,370), respectively. Bad debt expense (recoveries), net for the three and nine months ended September 30, 2014 were $4,374 and $(4,720), respectively.

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Includes other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s financial instruments include cash and cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses, revolving credit loan, revolving term loan from related party, net of discounts, term loan payable, capital lease obligations and other liabilities. The book value of the financial instruments is representative of their fair values. In accordance with this guidance, the Company measures its cash equivalents at fair value. The Company’s cash equivalents are classified within Level 1. Cash equivalents are valued primarily using quoted market prices utilizing market observable inputs. At September 30, 2015 and December 31, 2014, cash equivalents consisted of money market funds measured at fair value on a recurring basis; fair value of the Company’s money market funds was approximately $791,000 and $1,018,000, respectively.

Intangible Assets

Intangible assets consist of the Talon trade name acquired in a purchase business combination, patents, licenses, intellectual property rights and technology. Intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of ASC 350, “Intangibles - Goodwill and Other”. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives using the straight-line method, and are reviewed for impairment in accordance with the provisions of ASC 360, “Property, Plant and Equipment”. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.

The Company applies Accounting Standards Update (“ASU”) 2012-02, “Intangibles – Goodwill and Other - Testing Indefinite-lived Intangible Assets for Impairment” to determine whether an impairment is required.  The guidance gives companies the option to first perform a qualitative assessment to determine whether it is more likely than not, defined as a likelihood of more than 50%, that an indefinite-lived intangible asset is impaired.  If it is determined that it is more likely than not that an impairment exists, then the company is required to estimate the fair value of the indefinite-lived intangible assets and perform a quantitative impairment test in accordance with ASC 350-30. The Company completed the required assessment as of September 30, 2015 and December 31, 2014, and noted no impairment.

From time to time the Company makes investments in product and technical opportunities that are complimentary to or enhancements to its apparel accessories business.  During the three and nine months ended September 30, 2015, the Company invested $2,460 and $22,898, respectively in the acquisition of intellectual property rights complimentary to the Company’s Talon Zipper products. During the three and nine months ended September 30, 2014, the Company invested $37,737 and $40,037, respectively in the acquisition of intellectual property rights complimentary to the Company’s Talon Zipper products.. As of September 30, 2015 and December 31, 2014 the Company had accumulated investments of $68,955 and $46,057, respectively, for intellectual property rights complimentary to the Company’s Talon Zipper products, which were not yet in service.

Intangible assets as of September 30, 2015 and December 31, 2014 are as follows:

	September 30,			December 31,
	2015			2014
Tradename - Talon trademark	$	4,110,751		$	4,110,751
Intellectual property rights		247,677			224,779
Less: Accumulated amortization (10 to 17 years)		(45,259	)		(35,446	)
Intellectual property rights, net		202,418			189,333
Intangible assets, net	$	4,313,169		$	4,300,084

Amortization expense for intangible assets was $3,271 and $9,813, respectively for the three and nine months ended September 30, 2015 and 2014.

Classification of Expenses

Costs of Goods Sold – Cost of goods sold primarily includes expenses related to inventory purchases, customs, duty, freight, overhead expenses and reserves for obsolete inventory. Overhead expenses primarily consist of quality assurance costs, warehouse and operations salaries, and other warehouse expense.

Sales and Marketing Expenses – Sales and marketing expenses primarily include sales salaries and commissions, travel and entertainment, marketing, advertising and other sales and product development related costs. Marketing and advertising efforts are expensed as incurred.

General and Administrative Expenses – General and administrative expenses primarily include administrative salaries, employee benefits, professional service fees, facility expenses, information technology costs, investor relations, travel and entertainment, depreciation and amortization, bad debts and other general corporate expenses.

Interest Expense, net – Interest expense reflects the cost of borrowings, amortization of deferred financing costs and amortization of debt discounts. Interest expense for the three and nine months ended September 30, 2015 totaled $128,988 and $330,525, respectively. Interest expense for the three and nine months ended September 30, 2014 totaled $98,402 and $320,623, respectively. Interest income consists of earnings from cash held in interest bearing accounts. Interest income for the three and nine months ended September 30, 2015 totaled $1,022 and $1,998, respectively. Interest income for the three and nine months ended September 30, 2014 totaled $1,531 and $2,867, respectively.

Foreign Currency Translation

The Company has operations and holds assets in various foreign countries. The local currency is the functional currency for the Company’s subsidiaries in China and India. Assets and liabilities are translated at end-of-period exchange rates while revenues and expenses are translated at the average exchange rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss) until the translation adjustments are realized. Included in accumulated other comprehensive income was a cumulative foreign currency translation gain of $106,545 and $116,175 as of September 30, 2015 and December 31, 2014, respectively.

Comprehensive Income (loss)

Comprehensive income (loss) consists of net income (loss) and unrealized income (loss) on foreign currency translation adjustments. The foreign currency translation adjustment represents the net currency translation gains and losses related to our China and India subsidiaries, which have not been reflected in the net income for the periods presented.

The Company reports comprehensive income (loss) in accordance with Topic 220 “Comprehensive Income”, and uses the option provided under ASU 2011-05 “Presentation of Comprehensive Income” to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year.  The accounting estimates that require the Company’s most significant, difficult and subjective judgments include the valuation allowance for accounts receivable and inventory, the assessment of recoverability of long-lived assets and intangible assets, stock-based compensation and the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions). Actual results could differ materially from the Company’s estimates.

Presentation

In order to facilitate the comparison of financial information, certain amounts reported in the prior year have been reclassified to conform to the current year presentation.

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Note 5 - Accounts Receivable (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Receivables [Abstract]
Allowance for Doubtful Accounts Receivable, Current	$ 39,981	$ 50,563

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Note 12 - Segment Reporting and Geographic Information (Details) - Net Revenues and Operating Margins - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Segment Reporting Information [Line Items]
Net sales	$ 9,992,091	$ 11,749,970	$ 36,587,791	$ 39,052,257
Cost of goods sold	6,618,550	8,031,238	24,617,384	26,193,109
Gross profit	3,373,541	3,718,732	11,970,407	12,859,148
Operating expenses	3,210,310	3,403,610	11,180,154	10,920,267
Income from operations	163,231	315,122	790,253	1,938,881
Talon Zippers [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	3,981,191	6,011,455	17,924,116	20,420,661
Cost of goods sold	2,888,204	4,402,750	13,099,723	14,569,223
Gross profit	1,092,987	1,608,705	4,824,393	5,851,438
Talon Trim [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	5,516,407	5,669,249	17,133,223	18,538,867
Cost of goods sold	3,414,912	3,562,909	10,574,619	11,532,952
Gross profit	2,101,495	2,106,340	6,558,604	7,005,915
Talon Tekfit [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	494,493	69,266	1,530,452	92,729
Cost of goods sold	315,434	65,579	943,042	90,934
Gross profit	$ 179,059	$ 3,687	$ 587,410	$ 1,795

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Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 2,565,626	$ 2,603,138
Accounts receivable, net	3,449,269	3,019,749
Inventories, net	563,728	506,272
Current deferred income tax assets, net	894,282	746,370
Prepaid expenses and other current assets	581,563	551,775
Total current assets	8,054,468	7,427,304
Property and equipment, net	747,420	584,586
Intangible assets, net	4,313,169	4,300,084
Deferred income tax assets, net	5,248,912	5,374,468
Other assets	415,717	416,035
Total assets	18,779,686	18,102,477
Current liabilities:
Accounts payable	6,275,647	6,191,954
Other accrued expenses	2,473,231	2,403,563
Revolving credit loan	1,600,000	1,500,000
Current portion of revolving term loan from related party	83,333
Current portion of term loan payable		1,816,667
Current portion of capital lease obligations	21,509
Total current liabilities	11,158,308	11,912,184
Revolving term loan from related party, net of discounts and current portion	1,805,218
Term loan payable, net of current portion		1,016,667
Capital lease obligations, net of current portion	66,433
Deferred income tax liabilities	7,318	13,961
Other liabilities	207,080	26,077
Total liabilities	$ 13,244,357	$ 12,968,889
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Common Stock, $0.001 par value, 300,000,000 shares authorized; 92,267,831 shares issued and outstanding at September 30, 2015 and December 31, 2014	$ 92,268	$ 92,268
Additional paid-in capital	64,387,694	64,175,254
Accumulated deficit	(59,051,178)	(59,250,109)
Accumulated other comprehensive income	106,545	116,175
Total stockholders’ equity	5,535,329	5,133,588
Total liabilities and stockholders’ equity	18,779,686	$ 18,102,477
Employee Severance [Member]
Current liabilities:
Accrued severance payments	$ 704,588

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Supplemental Disclosures of Cash Flow Information (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash received (paid) during the period for:
Interest paid	$ (203,919)	$ (253,124)
Interest received	1,998	2,867
Income tax paid (refunded), net (principally foreign)	9,858	(70,316)
Non-cash financing activities:
Capital lease obligation	94,741
Non-cash exercise of stock options and settlement of RSUs in common stock		649
Warrants Issued To Related Party [Member]
Non-cash financing activities:
Warrants issued to related party	119,632
Effect of Foreign Currency Translation on Net Assets [Member]
Non-cash financing activities:
Lease incentives	(9,630)	716
Effect of foreign currency translation on net assets	(9,630)	$ 716
Leasehold Improvements [Member]
Non-cash financing activities:
Lease incentives	133,333
Effect of foreign currency translation on net assets	$ 133,333

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Note 7 - Credit Facilities and Related Party Transactions (Details) - Interest Expense Included in Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Note 7 - Credit Facilities and Related Party Transactions (Details) - Interest Expense Included in Consolidated Statements of Operations [Line Items]
Amortization of deferred financing cost	$ 43,021	$ 22,569	$ 100,935	$ 67,708
Amortization of debt discounts	8,183		8,183
Total Credit Facilities related interest expense	126,699	98,007	326,338	314,980
Interest Expense, Net	127,966	96,871	328,527	317,756
Miscellaneous [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) - Interest Expense Included in Consolidated Statements of Operations [Line Items]
Interest Expense, Net	1,267	(1,136)	2,189	2,776
Revolving Credit Facility [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) - Interest Expense Included in Consolidated Statements of Operations [Line Items]
Debt Interest Expense	35,841	14,695	96,543	45,441
Princess Investment Holdings, Inc [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) - Interest Expense Included in Consolidated Statements of Operations [Line Items]
Debt Interest Expense	27,397		27,397
Term Loan Payable [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) - Interest Expense Included in Consolidated Statements of Operations [Line Items]
Debt Interest Expense	$ 12,257	$ 60,743	$ 93,280	$ 201,831

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Note 4 - Net Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Net income (loss)			Shares		Per Share Amount
Three months ended September 30, 2015:
Basic net loss -
Net loss	$	(90,353	)		92,267,831	$	(0.00	)
Effect of Dilutive Securities -
Options and warrants		-			-		-
Diluted net loss	$	(90,353	)		92,267,831	$	(0.00	)
Three months ended September 30, 2014:
Basic net income -
Net income	$	57,086			92,267,831	$	0.00
Effect of Dilutive Securities -
Options		-			2,163,340		0.00
Diluted net income	$	57,086			94,431,171	$	0.00

	Net income		Shares		Per Share Amount
Nine months ended September 30, 2015:
Basic net income -
Net income	$	198,931		92,267,831	$	0.00
Effect of Dilutive Securities -
Options and warrants		-		1,252,061		0.00
Diluted net income	$	198,931		93,519,892	$	0.00
Nine months ended September 30, 2014:
Basic net income -
Net income	$	888,826		92,115,167	$	0.01
Effect of Dilutive Securities -
Options		-		2,295,869		0.00
Diluted net income	$	888,826		94,411,036	$	0.01

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Note 8 - Stockholders' Equity (Details) - USD ($)	Jul. 12, 2013	Sep. 30, 2015	Dec. 31, 2014	Dec. 04, 2014	Nov. 08, 2013	Nov. 07, 2013
Note 8 - Stockholders' Equity (Details) [Line Items]
Common Stock, Shares, Outstanding		92,267,831	92,267,831
Registration Rights Agreement, Shares Initially Issued in a Private Placement, Shares Registered for Resale				61,111,109
Common Stock, Shares Authorized		300,000,000	300,000,000		300,000,000	100,000,000
Preferred Stock, Shares Authorized		3,000,000	3,000,000
Preferred Stock, Par or Stated Value Per Share (in Dollars per share)		$ 0.001
Preferred Stock, Shares Outstanding		0	0
Common Stock [Member]
Note 8 - Stockholders' Equity (Details) [Line Items]
Proceeds from Issuance of Private Placement (in Dollars)	$ 5,500,000
Stock Issued During Period, Shares, New Issues	61,111,109
Sale of Stock, Price Per Share (in Dollars per share)	$ 0.09
Zipper Holdings, LLC [Member] | Common Stock [Member]
Note 8 - Stockholders' Equity (Details) [Line Items]
Stock Issued During Period, Shares, New Issues	8,333,333
Minimum [Member] | Kutula Holdings Ltd [Member]
Note 8 - Stockholders' Equity (Details) [Line Items]
Common Stock, Shares, Outstanding	15,500,000
Common Stock, Registration Rights Agreement, Minimum Percent of Shares Required for Registration Statement Filing	25.00%

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Note 7 - Credit Facilities and Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Interest Income and Interest Expense Disclosure [Table Text Block]

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
Revolving credit loan	$	35,841	$	14,695		$	96,543	$	45,441
Revolving term loan from related party		27,397		-			27,397		-
Term loan payable		12,257		60,743			93,280		201,831
Amortization of deferred financing cost		43,021		22,569			100,935		67,708
Amortization of debt discounts		8,183		-			8,183		-
Total Credit Facilities related interest expense		126,699		98,007			326,338		314,980
Other interest expense, net		1,267		(1,136	)		2,189		2,776
Interest expense , net	$	127,966	$	96,871		$	328,527	$	317,756

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Note 1 - Presentation of Interim Information

9 Months Ended

Sep. 30, 2015

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1.     Presentation of Interim Information

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information and footnote disclosures normally included in comprehensive financial statements have been condensed or omitted pursuant to such rules and regulations, although the management of Talon International, Inc. and its consolidated subsidiaries (collectively, the “Company”) believes that the disclosures made are adequate to make the information not misleading. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. 

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Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Common Stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized	300,000,000	300,000,000
Common Stock, shares issued	92,267,831	92,267,831
Common Stock,shares outstanding	92,267,831	92,267,831

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Note 11 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 11.     Commitments and Contingencies

The Company currently has pending claims and complaints that arise in the ordinary course of the Company’s business. The Company believes that it has meritorious defenses to these claims and that the claims are either covered by insurance or would not have a material effect on the Company’s consolidated financial position or results of operations if adversely determined against the Company.

In November 2002, the FASB issued Topics of the FASB ASC 460-10, “Guarantees” (“ASC 460-10”) and FASB ASC 850-10, “Related Party Disclosures” (”ASC 850-10”). The following is a summary of the Company’s agreements that it has determined are within the scope of ASC 460-10 and ASC 850-10:

● In accordance with the bylaws of the Company, and indemnification agreements entered into with the members of the Board of Directors and executive officers, the Company’s officers and directors are indemnified for certain events or occurrences arising as a result of the officer or director serving in such capacity. The term of the indemnification period is for the lifetime of the officer or director. The maximum potential amount of future payments the Company could be required to make under the indemnification provisions of its bylaws and indemnification agreements is unlimited. However, the Company has a director and officer liability insurance policy that reduces its exposure and enables it to recover a portion of any future amounts paid. As a result of its insurance policy coverage, the Company believes the estimated fair value of the indemnification provisions of its bylaws and indemnification agreements is minimal and therefore, the Company has not recorded any related liabilities.

● The Company enters into indemnification provisions under its agreements with investors and its agreements with other parties in the normal course of business, typically with suppliers, customers and landlords. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. These indemnification provisions often include indemnifications relating to representations made by the Company with regard to intellectual property rights, and generally survive termination of the underlying agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal and accordingly, the Company has not recorded any related liabilities.

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 11, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	TALON INTERNATIONAL, INC.
Trading Symbol	TALN
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		92,267,831
Amendment Flag	false
Entity Central Index Key	0001047881
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

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Note 12 - Segment Reporting and Geographic Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 12.      Segment Reporting and Geographic Information

The Company manufactures and distributes a full range of zipper (Talon Zipper), trim (Talon Trim) and waistband, shirt collars and other apparel components utilizing proprietary stretch technology (Talon Tekfit) to manufacturers of fashion apparel, specialty retailers and mass merchandisers. The Company’s organization is based on divisions representing the major product lines, and the Company’s operating decisions use these divisions to assess performance, allocate resources and make other operating decisions. Within these product lines there is not enough difference between the types of products to justify segmented reporting by product type or to account for these products separately. The net revenues and operating margins for the three primary product groups are as follows:

	Three Months ended September 30, 2015
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	3,981,191	$	5,516,407	$	494,493	$	9,992,091
Cost of goods sold		2,888,204		3,414,912		315,434		6,618,550
Gross profit	$	1,092,987	$	2,101,495	$	179,059		3,373,541
Operating expenses								3,210,310
Income from operations							$	163,231

	Three Months ended September 30, 2014
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	6,011,455	$	5,669,249	$	69,266	$	11,749,970
Cost of goods sold		4,402,750		3,562,909		65,579		8,031,238
Gross profit	$	1,608,705	$	2,106,340	$	3,687		3,718,732
Operating expenses								3,403,610
Income from operations							$	315,122

	Nine Months ended September 30, 2015
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	17,924,116	$	17,133,223	$	1,530,452	$	36,587,791
Cost of goods sold		13,099,723		10,574,619		943,042		24,617,384
Gross profit	$	4,824,393	$	6,558,604	$	587,410		11,970,407
Operating expenses								11,180,154
Income from operations							$	790,253

	Nine Months ended September 30, 2014
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	20,420,661	$	18,538,867	$	92,729	$	39,052,257
Cost of goods sold		14,569,223		11,532,952		90,934		26,193,109
Gross profit	$	5,851,438	$	7,005,915	$	1,795		12,859,148
Operating expenses								10,920,267
Income from operations							$	1,938,881

The Company distributes its products internationally and has reporting requirements based on geographic regions. Revenues are attributed to countries based upon customer delivery locations and the net book value of long-lived assets (consisting of property and equipment and intangibles) is attributed to countries based on the location of the assets, as follows:

Sales:	Three Months Ended September 30,				Nine Months Ended September 30,
Country / Region	2015		2014		2015		2014
United States	$	738,342	$	928,465	$	2,411,853	$	3,326,100
China		2,741,111		3,903,834		10,235,769		12,923,325
Hong Kong		2,456,406		2,858,004		7,889,511		9,079,162
Bangladesh		556,210		585,929		3,033,607		1,693,452
Vietnam		672,265		434,491		2,320,113		1,544,686
India		749,785		718,903		2,182,377		1,983,872
Other		2,077,972		2,320,344		8,514,561		8,501,660
Total	$	9,992,091	$	11,749,970	$	36,587,791	$	39,052,257

	September 30,		December 31,
	2015		2014
Long-lived Assets:
United States	$	4,785,588	$	4,554,831
China		172,746		178,873
Hong Kong		102,255		150,966
Total	$	5,060,589	$	4,884,670

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Consolidated Statements of Operations and Comprehensive Income (Loss)(Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net sales	$ 9,992,091	$ 11,749,970	$ 36,587,791	$ 39,052,257
Cost of goods sold	6,618,550	8,031,238	24,617,384	26,193,109
Gross profit	3,373,541	3,718,732	11,970,407	12,859,148
Sales and marketing expenses	1,494,693	1,636,759	4,778,754	4,754,723
General and administrative expenses	1,715,617	1,766,851	6,401,400	6,165,544
Total operating expenses	3,210,310	3,403,610	11,180,154	10,920,267
Income from operations	163,231	315,122	790,253	1,938,881
Interest expense, net	127,966	96,871	328,527	317,756
Loss on extinguishment of debt	134,049		134,049
Income (loss) before provision for income taxes	(98,784)	218,251	327,677	1,621,125
Provision for (benefit from) income taxes, net	(8,431)	161,165	128,746	732,299
Net income (loss)	(90,353)	57,086	198,931	888,826
Other comprehensive income (loss) from foreign currency translation	$ (10,220)	$ (1,141)	$ (9,630)	$ 716
Basic and diluted net income (loss) per share (in Dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ 0.01
Weighted average number of common shares outstanding - Basic (in Shares)	92,267,831	92,267,831	92,267,831	92,115,167
Weighted average number of common shares outstanding - Diluted (in Shares)	92,267,831	94,431,171	93,519,892	94,411,036
Net income (loss)	$ (90,353)	$ 57,086	$ 198,931	$ 888,826
Total comprehensive income (loss)	$ (100,573)	$ 55,945	$ 189,301	$ 889,542

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Note 6 - Inventories

9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

Note 6. Inventories

Inventories are stated at the lower of cost, determined using the first-in, first-out basis, or market value and are all categorized as finished goods. The costs of inventory include the purchase price, inbound freight and duties, conversion costs and certain allocated production overhead costs. Inventory valuation reserves are recorded for damaged, obsolete, excess and slow-moving inventory. The Company uses estimates to record these reserves. Slow-moving inventory is reviewed by category and may be partially or fully reserved depending on the type of product and the length of time the product has been included in inventory. Reserve adjustments are made for the difference between the cost of the inventory and the estimated market value, if lower, and charged to operations in the period in which the facts that give rise to these adjustments become known. Market value of inventory is estimated based on the impact of market trends, an evaluation of economic conditions and the value of current orders relating to the future sales of this inventory.

Inventories consist of the following:

	September 30,			December 31,
	2015			2014
Finished goods	$	628,850		$	705,368
Less: Reserves		(65,122	)		(199,096	)
Total inventories	$	563,728		$	506,272

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Note 5 - Accounts Receivable

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 5.     Accounts Receivable

Accounts receivable are included on the consolidated balance sheets net of the allowance for doubtful accounts. The allowance for doubtful accounts at September 30, 2015 and December 31, 2014 was $39,981 and $50,563, respectively.

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Note 6 - Inventories (Tables)

9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	September 30,			December 31,
	2015			2014
Finished goods	$	628,850		$	705,368
Less: Reserves		(65,122	)		(199,096	)
Total inventories	$	563,728		$	506,272

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Note 13 - Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 13.      Subsequent Events

The Company evaluated subsequent events after the balance sheet date of September 30, 2015 through the date of the filing of this report, and determined that there were no reportable subsequent events.

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Note 9 - Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 9.     Stock-Based Compensation and Other Share-Based Grants

The Company accounts for stock-based awards to employees and directors in accordance with FASB ASC 718, “Compensation - Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Options issued to all other non-employee parties are accounted for in accordance with the provisions of FASB ASC 505-50, “Equity-Based Payments to Non-Employees”.

Stock Options and Warrants

The Company’s 2008 Stock Incentive Plan initially authorized the issuance of up to 2,500,000 shares of common stock in awards to individuals under the plan. On November 19, 2010, an amendment to the 2008 Stock Incentive Plan increased the authorized shares from 2,500,000 to 4,810,000. On November 8, 2013, the Company’s stockholders approved a further amendment to the 2008 Stock Incentive Plan to increase from 4,810,000 to 15,000,000 the number of shares of common stock that may be issued pursuant to awards under the plan.

The Company’s 2007 Stock Plan was approved by the Company’s stockholders in 2007, and replaced the 1997 Stock Plan that had previously authorized the granting of a variety of stock-based incentive awards. The 2007 Stock Plan authorizes up to 2,600,000 shares of common stock for issuance pursuant to awards granted to individuals under the plan.

The Board of Directors, who determines the recipients and terms of the awards granted, administers the Company’s stock plans. Awards under the Company’s stock plans are generally granted with an exercise price equal to the average market price of the Company’s stock for the five trading days following the date of approval of the grant. Those option awards generally vest over periods determined by the Board of Directors from immediate to 4 years of continuous service and have 10 year contractual terms.

During the three and nine months ended September 30, 2015, 300,000 and 700,000 options, respectively were granted. During the three and nine months ended September 30, 2014, 3,645,000 and 4,045,000 options, respectively were granted.

During the nine months ended September 30, 2014, options were exercised to acquire 186,458 shares of common stock under the 2007 and 2008 Stock Incentive Plans, and 148,820 shares were retained by the Company in payment of the exercise price of $0.18 weighted average per share and the tax associated with the exercise of the options. At the time of exercise, the intrinsic value of the options exercised was $0.27 per share, and the retained shares had a value of $40,181. During the nine months ended September 30, 2014, options were also exercised to acquire 277,084 shares of common stock under the 2008 Stock Incentive Plan. Cash received upon exercise was $29,709 at a weighted average of $0.11 per share. At the time of exercise, the intrinsic value of the options exercised was $0.23 per share. No options were exercised during the three months ended September 30, 2014, and the three and nine months ended September 30, 2015.

As of September 30, 2015, the Company had $410,288 of unamortized stock-based compensation expense related to options issued to employees and directors, which will be recognized over the remaining weighted average period of 2.9 years. As of September 30, 2014, unamortized stock-based compensation expense related to options issued to employees and directors was $769,045, which was to be recognized over the weighted average period of approximately 3.72 years.

Pursuant to the Loan Agreement, the Company issued Princess Investment warrants to purchase 1,000,000 shares of the Company’s common stock. The warrants are exercisable immediately upon issuance for a five-year period at an exercise price of $0.18 per share on a cashless basis (See Note 7).

The following table summarizes the activity in the Company’s share-based compensation plans and other share-based grants during the nine months ended September 30, 2015.

	Number of Shares			Weighted Average Exercise Price
Employees and Directors
Options outstanding - January 1, 2015		9,747,767		$	0.20
Granted		400,000		$	0.17
Exercised		-		$	-
Cancelled		(1,832,500	)	$	0.28
Options outstanding - June 30, 2015		8,315,267		$	0.19
Granted		300,000		$	0.12
Exercised		-		$	-
Cancelled		(130,000	)	$	0.19
Options outstanding - September 30, 2015		8,485,267		$	0.18
Non Employees
Warrants outstanding – January 1, 2015 and June 30, 2015		-		$	-
Granted		1,000,000		$	0.18
Exercised		-		$	-
Cancelled		-		$	-
Warrants outstanding - September 30, 2015		1,000,000		$	0.18

Restricted Stock Units (RSUs)

On July 30, 2010, the Company awarded each of Lonnie D. Schnell (the Company’s Chief Executive Officer through April 10, 2015) and Larry Dyne (the Company’s Chief Executive Officer effective April 13, 2015 and President at the time) a restricted stock unit award (an “RSU Award”) for 5,778,500 shares of the Company’s common stock. Each RSU Award vested 50% on August 30, 2011, and 10% on each date which is 18, 24, 30, 36 and 42 months following the grant date, subject to partial acceleration of vesting as part of the executives’ severance benefits and full acceleration of vesting upon a change in control of the Company. As of July 30, 2010, the RSUs were valued at $2,263,884, which was reduced by the fair value of the options surrendered by the employees in connection with these grants.

On August 30, 2010, Mr. Schnell and Mr. Dyne elected to defer the settlement in common shares of 5,434,200 RSUs beyond the vesting dates.

On January 30, 2014, 610,894 shares of common stock were issued upon final settlement of vested restricted stock units, and the equivalent of 544,806 shares were retained by the Company in payment of the tax associated with the vesting of restricted stock units previously granted to the reporting persons. During the three and nine months ended September 30, 2015 no shares were issued upon settlement of vested restricted stock units.

There were no outstanding RSUs and no unamortized stock-based compensation expense related to RSUs as of September 30, 2015 and December 31, 2014.

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Note 7 - Credit Facilities and Related Party Transactions

9 Months Ended

Sep. 30, 2015

Related Party Disclosure [Member]

Note 7 - Credit Facilities and Related Party Transactions [Line Items]

Debt Disclosure [Text Block]

Note 7.     Credit Facilities and Related Party Transactions

Union Bank Credit Facilities

On December 31, 2013, the Company entered into a Commercial Credit Agreement (the “Credit Agreement”) with MUFG Union Bank, N.A. (formerly Union Bank, N.A., “Union Bank”). The Credit Agreement initially provided for a 24 month revolving loan commitment and a 36 month term loan. While the revolving loan commitment with Union Bank remains available through December 31, 2015, the term loan was extinguished during the quarter ended September 30, 2015 using proceeds from related party borrowings (See Revolving Term Loan from related party).

The revolving loan commitment includes available borrowings of up to $3,500,000 (the “Revolving Credit Loan”), consisting of revolving loans and a sublimit of letters of credit not to exceed a maximum aggregate principal amount of $1,000,000. Borrowings under the Revolving Credit Loan initially carried interest at a per annum rate of two and one-half percent (2.50%) in excess of a reference rate (“Reference Rate”), which is an index rate determined by Union Bank from time to time as a means of pricing certain extensions of credit. The Reference Rate was 3.25% as of September 30, 2015 and December 31, 2014.

The Credit Agreement initially provided for a term loan in the amount of $5,000,000 (the “Term Loan Payable” and together with the Revolving Credit Loan, the “Union Bank Credit Facilities”). The Term Loan Payable was originally payable in 36 monthly payments of $138,889 beginning January 31, 2014 with interest payable at a per annum rate of two and three-quarters percent (2.75%) in excess of the Reference Rate. The Company paid $250,000 in financing costs associated with the Credit Agreement and used all of the proceeds of the Term Loan and $827,490 of the proceeds of the Revolving Credit Loan to repay in full at December 31, 2013, a promissory note entered into in July 2013 with CVC California, LLC in the principal amount of $5,800,000 plus accrued interest. The Credit Agreement contains representations and warranties, affirmative, negative and events of default, applicable to the Company and its subsidiaries which are customary for Union Bank Credit Facilities of this type. The Credit Agreement initially contained financial covenants applicable to the Company and its subsidiaries including maintaining a Fixed Charge Coverage Ratio between Adjusted EBITDA and principal and interest payments (as defined in the Credit Agreement) of not less than 1.25:1.00 as of the close of each fiscal quarter and an EBITDA (as defined in the Credit Agreement) of at least $2,750,000 as of the close of each fiscal quarter, for the 12-month period ended as of the last day of the quarter. The Company did not satisfy the previous minimum Fixed Charge Coverage Ratio requirement (1.25:1.00) and the previous minimum EBITDA requirement of $2,750,000 for the 12-month periods ended September 30, 2014 and December 31, 2014, and in connection therewith obtained waivers of such non-compliance from Union Bank for those periods. In exchange for the waivers, the Company paid Union Bank a waiver fee of $10,000, and at December 31, 2014 a prepayment in the amount of $500,000 was made and applied to the principal of the Term Loan Payable and certain provisions of the Credit Agreement were amended.

On March 3, 2015, the Credit Agreement was further amended to change various contractual terms as follows: the Fixed Charge Coverage Ratio requirement was reduced for the periods ended March 31, 2015 to 0.70:1.00 and for June 30, 2015 to 1.00:1.00; the minimum EBITDA requirement for the 12-month period ended as of the last day of each of these quarters during 2015 was reduced from $2,750,000 to $1,750,000; the requirement of no incurrence of a net loss after taxes for more than two consecutive fiscal quarters was changed to be effective January 1, 2015; net principal repayments totaling $600,000 in 2015 were added to the Term Loan Payable scheduled payments ($400,000 were paid during the second quarter of 2015 and the remaining $200,000 were paid during the third quarter of 2015), and excluded from the Fixed Charge Coverage Ratio calculation; the interest rate on the Term Loan Payable and Revolving Credit Loan was increased by 1% effective March 1, 2015; and the Company paid a loan modification fee of $50,000, half of which was paid on March 31, 2015 and the other half was paid on June 30, 2015. Additional legal fees were charged by Union Bank during the first quarter of 2015 in the amount of $6,915. The Company did not satisfy the minimum EBITDA requirement for the 12-month period ended June 30, 2015, due primarily to a $715,000 one-time accrual for severance payments to Lonnie D. Schnell, the Company’s former CEO and board member, that was recognized upon separation during the three months ended June 30, 2015. On August 4, 2015, the Company obtained a waiver from Union Bank of this minimum EBITDA requirement non-compliance and paid Union Bank a waiver fee of $25,000 as a condition to the waiver.

The payment and performance of all indebtedness and other obligations under the Union Bank Credit Facilities are secured by liens on substantially all of the Company assets pursuant to the terms and conditions of security agreements and guaranties executed by the Company and its principle operating subsidiaries including Talon Technologies, Inc. (U.S. operation) and Tag-It Pacific Limited (Hong Kong operation).

On August 10, 2015, the Company entered into an amendment to the Credit Agreement with Union Bank, which provided for the elimination of financial covenants for the remaining term of the Credit Agreement, permitted the Company to incur $3,000,000 of subordinated indebtedness, and required the repayment of the outstanding Term Loan Payable in the principal amount of $1,440,278 plus accrued and unpaid interest by August 31, 2015. In connection with the amendment, the Company incurred approximately $18,000 in legal fees, representing additional financing costs to the Union Bank Credit Facilities. On August 11, 2015, the Company received an advance from Princess Investment Holdings Inc. (“Princess Investment”) (which is a related company of Kutula Holdings, a major stockholder and related party to our Company), and on August 12, 2015 we paid off the outstanding Term Loan Payable from Union Bank as well as the unpaid interest.

The Company has accounted for the payment in full of the Term Loan Payable as a debt extinguishment in accordance with FASB ASC No. 405 “Liabilities” and FASB ASC No. 470-50 “Debt, Modifications and Extinguishments”, resulting in a loss on extinguishment of debt of $134,049 included as non-operating expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2015. The loss on extinguishment was equal to the difference between the funded amount and the fair value of the debt extinguished at the transaction date.

The Company had outstanding borrowings as of September 30, 2015 and December 31, 2014 of $1,600,000 and $4,333,334, respectively, under the Union Bank Credit Facilities, of which $1,600,000 and $1,500,000, respectively, relates to obligations under the Revolving Credit Loan and at December 31, 2014 the remainder relates to the Term Loan Payable. During the nine months ended September 30, 2015, the Company obtained advances under the Revolving Credit Loan of $700,000, with no borrowings during the three months ended September 30, 2015, and repayments of $600,000 during the three and nine months ended September 30, 2015, resulting in a net increase in the outstanding borrowings to $1,600,000 at September 30, 2015.  Approximately $331,000 remained in available borrowings under the Revolving Credit Loan as of September 30, 2015.

The Revolving Term Loan commitment with Union Bank will terminate on December 31, 2015 and the Company intends to refinance its loan with Union Bank by such date using proceeds from an alternate financing source.

Revolving Term Loan from Related Party

On August 10, 2015, the Company entered into a loan and reimbursement agreement (“Loan Agreement”) with Princess Investment (which is a related company of Kutula Holdings, a major stockholder and related party to our Company), pursuant to which Princess Investment agreed to make available to the Company a loan of up to $3,000,000 (“Revolving Term Loan”). Advances under the Loan Agreement will accrue interest on the unpaid principal balance at an annual rate of 12.5%. Accrued interest on the Revolving Term Loan is payable monthly beginning September 1, 2015, and the principal amount is payable in monthly installments beginning September 1, 2016 and continuing through the maturity date of August 10, 2018.

On August 11, 2015, the Company received an advance from Princess Investment under the Loan Agreement in the amount of $1,500,000, of which $1,440,278 was used to pay off the Term Loan Payable to Union Bank on August 12, 2015. The Company borrowed an additional $500,000 during the three months ended September 30, 2015, and had an outstanding balance of $2,000,000 under the Revolving Term Loan from Princess Investment at September 30, 2015 (reflecting a balance of $1,888,551 net of debt discounts). Approximately $1,000,000 remained in available borrowings under the Revolving Term Loan as of September 30, 2015.

The payment and performance of all our indebtedness and other obligations to Princess Investment, including all borrowings under the Loan Agreement, are guaranteed by the Company’s subsidiaries Talon Technologies, Inc. and Tag-It Pacific Limited pursuant to a Guaranty Agreement. The payment and performance of all of our indebtedness and other obligations to Princess Investment under the Loan Agreement and related agreements are secured by liens on substantially all of the assets of the Company and its subsidiary guarantors pursuant to the terms and conditions of a Pledge and Security Agreement executed by the Company and guarantors in favor of Princess Investment.

Total interest related to the Revolving Term Loan for the three and nine months ended September 30, 2015 amounted to $27,397. Total financing costs related to the Revolving Term Loan during the three and nine months ended September 30, 2015 amounted to $99,011, of which $60,000 will be paid upon maturity. The financing costs are being amortized over the three year term of the Loan.

Pursuant to the Loan Agreement, the Company issued Princess Investment warrants to purchase 1,000,000 shares of the Company’s common stock. The warrants are exercisable immediately upon issuance for a five-year period at an exercise price of $0.18 per share on a cashless basis. After consideration of FASB ASC 480 “Distinguishing Liability and Equity” and ASC 815 “Derivatives and Hedging”, the Company concluded that the warrants should be recorded as an equity instrument. The fair value of the warrants of $130,000 issued with this debt facility was valued using the Black-Scholes model, and the portion of the warrants and the Revolving Term Note were allocated using the relative fair value method in accordance with ASC 470-20-25-2. As a result, the allocated amount for the warrants amounted to $119,632 and were recorded as additional paid in capital, and reflected as a debt discount to the face value of the Revolving Term Note. The discount is being amortized over the term of the Loan and recognized as additional interest cost as amortized.

Interest expense, net, included on the Company’s Consolidated Statements of Operations and Comprehensive Income is comprised as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
Revolving credit loan	$	35,841	$	14,695		$	96,543	$	45,441
Revolving term loan from related party		27,397		-			27,397		-
Term loan payable		12,257		60,743			93,280		201,831
Amortization of deferred financing cost		43,021		22,569			100,935		67,708
Amortization of debt discounts		8,183		-			8,183		-
Total Credit Facilities related interest expense		126,699		98,007			326,338		314,980
Other interest expense, net		1,267		(1,136	)		2,189		2,776
Interest expense , net	$	127,966	$	96,871		$	328,527	$	317,756

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Note 8 - Stockholders' Equity

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 8.     Stockholders’ Equity

Private Placement of Common Stock

In July 2013 the Company raised $5,500,000 of new equity through the sale, in a private placement transaction, of 61,111,109 shares of the Company’s common stock at a price of $0.09 per share. Zipper Holdings, LLC, a related party company controlled by Mark Dyne, the Chairman of the Company’s Board of Directors, acquired 8,333,333 shares of common stock in the private placement.

In connection with the private placement, the Company entered into a series of Subscription Agreements (the “Subscription Agreements”) and a Registration Rights Agreement (the “Registration Rights Agreement“) with the investors in the transaction. The Subscription Agreement entered into with Kutula Holdings Ltd. (“Kutula”) grants Kutula the right to nominate one member of the Company’s Board of Directors, so long as Kutula continues to hold at least 15,500,000 of the shares (as adjusted for stock splits and the like) purchased pursuant to its Subscription Agreement, subject to certain disclosure requirements and other limitations. The Registration Rights Agreement provides for demand registration rights, such that upon the demand of holders of at least 25% of the shares issued in the private placement and subject to certain conditions, the Company will then file a registration statement covering the shares issued in the private placement that requested to be included in such registration. The Registration Rights Agreement also provides certain piggyback rights, in which the holders of shares acquired in the private placement have the right to include those shares in a Company-initiated registration.

Pursuant to its obligations under the Registration Rights Agreement, the Company filed a registration statement on Form S-1 with the SEC on November 20, 2014 to register for resale all of the 61,111,109 shares issued in the private placement.  The registration statement was declared effective on December 4, 2014. 

Authorized Common Stock and Preferred Stock

On November 8, 2013, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to increase the number of shares of common stock authorized to be issued from 100,000,000 to 300,000,000. At the Company’s 2015 Annual Meeting of Stockholders, the stockholders approved an amendment to the Company’s Certificate of Incorporation to allow for a reverse split of the Company’s outstanding shares of common stock any time prior to the 2016 Annual Meeting authorizing the Board of Directors, when and if the Board of Directors determine that such action is appropriate.

The Company’s Certificate of Incorporation presently authorizes the issuance of 3,000,000 shares of Preferred Stock, having a par value of $0.001 per share. No shares of Preferred Stock were outstanding at September 30, 2015 or December 31, 2014.

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Note 10 - Income Taxes

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 10.      Income taxes

Provision for (benefit from) income taxes, net, for the three and nine months ended September 30, 2015 was $(8,431) and $128,746, respectively. Provision for income taxes, net, for the three and nine months ended September 30, 2014 was $161,165 and $732,299, respectively.

Current income taxes receivable were associated with foreign and domestic prepayments net of income tax payable, and totaled $8,503 and $66,270 as of September 30, 2015 and December 31, 2014, respectively.

Current income taxes payable were principally associated with foreign withholdings, funds transfers, and income tax payable from the Company’s Asia operations. Current income taxes payable as of September 30, 2015 and December 31, 2014 totaled $184,734 and $78,455, respectively, and were included in accrued expenses.

Deferred income tax assets, net, totaled $6,143,193 and $6,120,838 as of September 30, 2015 and December 31, 2014, respectively, are included in long term deferred income tax assets, net, and in current deferred income tax assets, net.

Deferred income tax liabilities totaled $7,318 and $13,961 as of September 30, 2015 and December 31, 2014, respectively.

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Note 7 - Credit Facilities and Related Party Transactions (Details)								1 Months Ended	3 Months Ended				6 Months Ended	9 Months Ended		12 Months Ended
	Aug. 10, 2015 USD ($) $ / shares shares	Aug. 04, 2015 USD ($)	Mar. 03, 2015 USD ($)	Mar. 01, 2015	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2013 USD ($)	Jan. 31, 2014	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Proceeds from Lines of Credit														$ 700,000	$ 500,000
Payments of Financing Costs														138,715
Gains (Losses) on Extinguishment of Debt									$ (134,049)					(134,049)
Repayments of Lines of Credit														600,000	500,000
Interest Expense, Debt									126,699			$ 98,007		326,338	314,980
CVC [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Repayments of Notes Payable							$ 5,800,000
Former CEO and Board Member [Member] | Employee Severance Payment [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Officers' Compensation										$ 715,000
Union Bank [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Long-term Debt					$ 4,333,334				1,600,000				$ 1,600,000	1,600,000		$ 4,333,334
Union Bank [Member] | Revolving Credit Facility [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Proceeds from Lines of Credit									$ 0					$ 700,000
Union Bank [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Debt Instrument, Covenant, Minimum Fixed Charge Coverage Ratio					1.25				1.25				1.25	1.25		1.25
Debt Instrument, Covenant, Minimum EBITDA					$ 2,750,000						$ 1,750,000	$ 2,750,000			2,750,000	$ 2,750,000
Union Bank [Member] | Scenario, Forecast [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Debt Instrument, Covenant, Minimum Fixed Charge Coverage Ratio										1.00	0.70
Union Bank [Member] | Waiver Fees [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Payments of Financing Costs		$ 25,000														10,000
Union Bank [Member] | Legal Fees [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Payments of Financing Costs											$ 6,915
Union Bank [Member] | Revolving Credit Facility [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Debt Instrument, Term							24 months
Line of Credit Facility, Maximum Borrowing Capacity						$ 3,500,000	$ 3,500,000
Proceeds from Lines of Credit							$ 1,000,000
Debt Instrument, Basis Spread on Variable Rate							2.50%
Long-term Line of Credit					1,500,000				$ 1,600,000				$ 1,600,000	$ 1,600,000		$ 1,500,000
Repayments of Lines of Credit									600,000					600,000
Line of Credit Facility, Remaining Borrowing Capacity									331,000				331,000	331,000
Princess Investment Holdings, Inc [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Line of Credit Facility, Remaining Borrowing Capacity									1,000,000				1,000,000	1,000,000
Debt Instrument, Interest Rate During Period	12.50%
Proceeds from Related Party Debt									1,500,000					2,000,000
Long-term Debt, Gross									2,000,000				2,000,000	2,000,000
Notes Payable, Related Parties									1,888,551				1,888,551	1,888,551
Interest Expense, Debt									27,397					27,397
Princess Investment Holdings, Inc [Member] | Permission from Union Bank Lender to Borrow from Princess Investment Holdings [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Subordinated Debt, Maximum Indebtedness	$ 3,000,000
Princess Investment Holdings, Inc [Member] | Additional Advance [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Proceeds from Related Party Debt									500,000
Princess Investment Holdings, Inc [Member] | Loan Fee and Additional Legal Fees [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Payments of Financing Costs									99,011					99,011
Princess Investment Holdings, Inc [Member] | Loan Fee [Member] | Paid Upon Maturity [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Payments of Financing Costs									60,000					60,000
Princess Investment Warrant [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | shares	1,000,000
Class of Warrant or Right, Warrant Term	5 years
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ / shares	$ 0.18
Warrants and Rights Outstanding									130,000				$ 130,000	130,000
Adjustments to Additional Paid in Capital, Warrant Issued														119,632
Term Loan Payable [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Repayments of Notes Payable														2,833,334	$ 1,250,000
Term Loan Payable [Member] | Union Bank [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Debt Instrument, Term							36 months
Debt Instrument, Basis Spread on Variable Rate								2.75%
Debt Instrument, Face Amount						5,000,000	$ 5,000,000
Debt Instrument, Periodic Payment, Principal						$ 138,889
Payments of Financing Costs							250,000
Repayments of Notes Payable					$ 500,000				1,440,278
Notes Payable to Bank	$ 1,440,278
Gains (Losses) on Extinguishment of Debt									$ (134,049)					$ (134,049)
Term Loan Payable [Member] | Union Bank [Member] | Loan Modification Fee [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Payments of Financing Costs			$ 50,000
Term Loan Payable [Member] | Union Bank [Member] | Legal Fees [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Payments of Financing Costs	$ 18,000
Term Loan Payable [Member] | Union Bank [Member] | Revolving Credit Facility [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Debt Instrument, Interest Rate, Increase (Decrease)				1.00%
Term Loan Payable [Member] | Union Bank [Member] | Prime Rate [Member] | Revolving Credit Facility [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Debt Instrument, Interest Rate, Stated Percentage					3.25%				3.25%				3.25%	3.25%		3.25%
Term Loan Payable [Member] | Union Bank [Member] | Amended Principal Repayments [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Repayments of Notes Payable									$ 200,000	$ 400,000			$ 600,000
CVC [Member] | Union Bank [Member]
Note 7 - Credit Facilities and Related Party Transactions (Details) [Line Items]
Proceeds from Lines of Credit							$ 827,490

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Note 2 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

	September 30,			December 31,
	2015			2014
Tradename - Talon trademark	$	4,110,751		$	4,110,751
Intellectual property rights		247,677			224,779
Less: Accumulated amortization (10 to 17 years)		(45,259	)		(35,446	)
Intellectual property rights, net		202,418			189,333
Intangible assets, net	$	4,313,169		$	4,300,084

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Note 12 - Segment Reporting and Geographic Information (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months ended September 30, 2015
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	3,981,191	$	5,516,407	$	494,493	$	9,992,091
Cost of goods sold		2,888,204		3,414,912		315,434		6,618,550
Gross profit	$	1,092,987	$	2,101,495	$	179,059		3,373,541
Operating expenses								3,210,310
Income from operations							$	163,231

	Three Months ended September 30, 2014
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	6,011,455	$	5,669,249	$	69,266	$	11,749,970
Cost of goods sold		4,402,750		3,562,909		65,579		8,031,238
Gross profit	$	1,608,705	$	2,106,340	$	3,687		3,718,732
Operating expenses								3,403,610
Income from operations							$	315,122

	Nine Months ended September 30, 2015
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	17,924,116	$	17,133,223	$	1,530,452	$	36,587,791
Cost of goods sold		13,099,723		10,574,619		943,042		24,617,384
Gross profit	$	4,824,393	$	6,558,604	$	587,410		11,970,407
Operating expenses								11,180,154
Income from operations							$	790,253

	Nine Months ended September 30, 2014
	Talon Zipper		Talon Trim		Talon Tekfit		Talon Consolidated
Net sales	$	20,420,661	$	18,538,867	$	92,729	$	39,052,257
Cost of goods sold		14,569,223		11,532,952		90,934		26,193,109
Gross profit	$	5,851,438	$	7,005,915	$	1,795		12,859,148
Operating expenses								10,920,267
Income from operations							$	1,938,881

Revenue from External Customers by Geographic Areas [Table Text Block]

Sales:	Three Months Ended September 30,				Nine Months Ended September 30,
Country / Region	2015		2014		2015		2014
United States	$	738,342	$	928,465	$	2,411,853	$	3,326,100
China		2,741,111		3,903,834		10,235,769		12,923,325
Hong Kong		2,456,406		2,858,004		7,889,511		9,079,162
Bangladesh		556,210		585,929		3,033,607		1,693,452
Vietnam		672,265		434,491		2,320,113		1,544,686
India		749,785		718,903		2,182,377		1,983,872
Other		2,077,972		2,320,344		8,514,561		8,501,660
Total	$	9,992,091	$	11,749,970	$	36,587,791	$	39,052,257

Long-lived Assets by Geographic Areas [Table Text Block]

	September 30,		December 31,
	2015		2014
Long-lived Assets:
United States	$	4,785,588	$	4,554,831
China		172,746		178,873
Hong Kong		102,255		150,966
Total	$	5,060,589	$	4,884,670

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Note 12 - Segment Reporting and Geographic Information (Details) - Revenues by Delivery Locations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Note 12 - Segment Reporting and Geographic Information (Details) - Revenues by Delivery Locations [Line Items]
Sales - Geographic Regions	$ 9,992,091	$ 11,749,970	$ 36,587,791	$ 39,052,257
Geography Eliminations [Member] | UNITED STATES
Note 12 - Segment Reporting and Geographic Information (Details) - Revenues by Delivery Locations [Line Items]
Sales - Geographic Regions	738,342	928,465	2,411,853	3,326,100
Geography Eliminations [Member] | CHINA
Note 12 - Segment Reporting and Geographic Information (Details) - Revenues by Delivery Locations [Line Items]
Sales - Geographic Regions	2,741,111	3,903,834	10,235,769	12,923,325
Geography Eliminations [Member] | HONG KONG
Note 12 - Segment Reporting and Geographic Information (Details) - Revenues by Delivery Locations [Line Items]
Sales - Geographic Regions	2,456,406	2,858,004	7,889,511	9,079,162
Geography Eliminations [Member] | BANGLADESH
Note 12 - Segment Reporting and Geographic Information (Details) - Revenues by Delivery Locations [Line Items]
Sales - Geographic Regions	556,210	585,929	3,033,607	1,693,452
Geography Eliminations [Member] | VIET NAM
Note 12 - Segment Reporting and Geographic Information (Details) - Revenues by Delivery Locations [Line Items]
Sales - Geographic Regions	672,265	434,491	2,320,113	1,544,686
Geography Eliminations [Member] | INDIA
Note 12 - Segment Reporting and Geographic Information (Details) - Revenues by Delivery Locations [Line Items]
Sales - Geographic Regions	749,785	718,903	2,182,377	1,983,872
Geography Eliminations [Member] | Other Geographical Area [Member]
Note 12 - Segment Reporting and Geographic Information (Details) - Revenues by Delivery Locations [Line Items]
Sales - Geographic Regions	$ 2,077,972	$ 2,320,344	$ 8,514,561	$ 8,501,660

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net income	$ 198,931	$ 888,826
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	189,309	207,195
Loss on extinguishment of debt	134,049
Loss (gain) on disposal of property and equipment	281	(2,130)
Amortization of deferred financing cost and debt discounts	109,117	67,708
Stock based compensation	92,808	181,410
Deferred income taxes (benefits), net	(29,590)	321,867
Bad debt recoveries, net	(7,370)	(4,720)
Inventory valuation provisions, net	10,882	9,436
Changes in operating assets and liabilities:
Accounts receivable	(446,813)	42,178
Inventories	(69,326)	215,452
Prepaid expenses and other current assets	(32,923)	(4,592)
Other assets.	(97,293)	(16,727)
Accounts payable and accrued expenses	943,966	(541,082)
Other liabilities	47,670	(9,377)
Net cash provided by operating activities	1,043,698	1,355,444
Cash flows from investing activities:
Proceeds from sale of equipment	350	2,783
Acquisitions of property and equipment	(121,393)	(148,989)
Acquisitions of intangibles	(22,898)	(40,037)
Net cash used in investing activities	(143,941)	(186,243)
Cash flows from financing activities:
Revolving credit loan borrowings	700,000	500,000
Payment of revolving credit loan	(600,000)	(500,000)
Payment of financing costs associated with credit facilities	(138,715)
Payment of capital leases	(6,799)
Payments related to taxes on the exercise of stock options and settlement of RSUs		(143,537)
Proceeds from exercise of stock options		29,709
Net cash used in financing activities	(878,848)	(1,363,828)
Net effect of foreign currency exchange translation on cash	(58,421)	(4,377)
Net decrease in cash and cash equivalents	(37,512)	(199,004)
Cash and cash equivalents at beginning of period	2,603,138	3,779,508
Cash and cash equivalents at end of period	2,565,626	3,580,504
Princess Investment Holdings, Inc [Member]
Cash flows from financing activities:
Revolving term loan from related party borrowings	2,000,000
Term Loan Payable [Member]
Cash flows from financing activities:
Payments of term loan payable	$ (2,833,334)	$ (1,250,000)

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Note 4 - Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Note 4. Net Income (Loss) Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted net income (loss) per share computations:

	Net income (loss)			Shares		Per Share Amount
Three months ended September 30, 2015:
Basic net loss -
Net loss	$	(90,353	)		92,267,831	$	(0.00	)
Effect of Dilutive Securities -
Options and warrants		-			-		-
Diluted net loss	$	(90,353	)		92,267,831	$	(0.00	)
Three months ended September 30, 2014:
Basic net income -
Net income	$	57,086			92,267,831	$	0.00
Effect of Dilutive Securities -
Options		-			2,163,340		0.00
Diluted net income	$	57,086			94,431,171	$	0.00

	Net income		Shares		Per Share Amount
Nine months ended September 30, 2015:
Basic net income -
Net income	$	198,931		92,267,831	$	0.00
Effect of Dilutive Securities -
Options and warrants		-		1,252,061		0.00
Diluted net income	$	198,931		93,519,892	$	0.00
Nine months ended September 30, 2014:
Basic net income -
Net income	$	888,826		92,115,167	$	0.01
Effect of Dilutive Securities -
Options		-		2,295,869		0.00
Diluted net income	$	888,826		94,411,036	$	0.01

For the three months ended September 30, 2015, options to purchase 8,485,287 shares of common stock exercisable between $0.04 and $1.33 per share and warrants to purchase 1,000,000 shares of common stock exercisable at $0.18 per share, were outstanding but were not included in the computation of diluted net loss per share because they would have an antidilutive effect on the net loss per share.

For the nine months ended September 30, 2015, options to purchase 2,691,667 shares of common stock exercisable between $0.04 and $0.11 per share were included in the computation of diluted net income per share, while options to purchase 5,793,600 shares of common stock exercisable between $0.11 and $1.33 per share and warrants to purchase 1,000,000 shares of common stock exercisable at $0.18 per share, were outstanding but were not included in the computation of diluted net income per share because they would have an antidilutive effect on the net income per share.

For the three and nine months ended September 30, 2014, options to purchase 5,066,667 shares of common stock exercisable between $0.04 and $0.20 per share were included in the computation of diluted net income per share. For the three and nine months ended September 30, 2014, options to purchase 4,683,600 shares of common stock exercisable between $0.21 and $5.23 per share, were outstanding but were not included in the computation of diluted net income per share because they would have an antidilutive effect on the net income per share.

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Note 2 - Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items]
Provision for Doubtful Accounts	$ 7,487	$ 4,374	$ (7,370)	$ (4,720)
Goodwill and Intangible Asset Impairment			0		$ 0
Payments to Acquire Intangible Assets	2,460	37,737	22,898	40,037
Finite-Lived Intangible Assets, Gross	247,677		247,677		224,779
Amortization of Intangible Assets	3,271	3,271	9,813	9,813
Interest Expense	128,988	98,402	330,525	320,623
Interest Income, Other	1,022	$ 1,531	1,998	$ 2,867
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	106,545		106,545		116,175
Money Market Funds [Member]
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	791,000		791,000		1,018,000
Intellectual Property [Member]
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items]
Finite-Lived Intangible Assets, Gross	$ 68,955		$ 68,955		$ 46,057

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Note 9 - Stock-Based Compensation (Details) - Stock Options - $ / shares	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015	Sep. 30, 2015	Sep. 30, 2014
Princess Investment Warrant [Member] | Non-Employee [Member]
Non Employees
Warrants outstanding – January 1, 2015 and June 30, 2015	0
Warrants outstanding – January 1, 2015 and June 30, 2015	$ 0
Warrants outstanding - September 30, 2015	1,000,000		0	1,000,000
Warrants outstanding - September 30, 2015	$ 0.18		$ 0	$ 0.18
Granted	1,000,000
Granted	$ 0.18
Options Issued To Employees And Directors [Member]
Employees and Directors
Options outstanding	8,315,267		9,747,767	9,747,767
Options outstanding	$ 0.19		$ 0.20	$ 0.20
Granted	300,000	3,645,000	400,000	700,000	4,045,000
Granted	$ 0.12		$ 0.17
Cancelled	(130,000)		(1,832,500)
Cancelled	$ 0.19		$ 0.28
Options outstanding	8,485,267		8,315,267	8,485,267
Options outstanding	$ 0.18		$ 0.19	$ 0.18

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Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Allowance for Accounts Receivable Doubtful Accounts

The Company is required to make judgments as to the collectibility of accounts receivable based on established aging policy, historical experience and future expectations. The allowances for doubtful accounts represent allowances for customer trade accounts that are estimated to be partially or entirely uncollectible. These allowances are used to reduce gross trade receivables to their net realizable value. The Company records these allowances based on estimates related to the following factors: (i) customer specific allowances; (ii) amounts based upon an aging schedule; and (iii) an estimated amount, based on the Company’s historical experience, for issues not yet identified. Bad debt expense (recoveries), net for the three and nine months ended September 30, 2015 were $7,487 and $(7,370), respectively. Bad debt expense (recoveries), net for the three and nine months ended September 30, 2014 were $4,374 and $(4,720), respectively.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Includes other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s financial instruments include cash and cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses, revolving credit loan, revolving term loan from related party, net of discounts, term loan payable, capital lease obligations and other liabilities. The book value of the financial instruments is representative of their fair values. In accordance with this guidance, the Company measures its cash equivalents at fair value. The Company’s cash equivalents are classified within Level 1. Cash equivalents are valued primarily using quoted market prices utilizing market observable inputs. At September 30, 2015 and December 31, 2014, cash equivalents consisted of money market funds measured at fair value on a recurring basis; fair value of the Company’s money market funds was approximately $791,000 and $1,018,000, respectively.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets

Intangible assets consist of the Talon trade name acquired in a purchase business combination, patents, licenses, intellectual property rights and technology. Intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of ASC 350, “Intangibles - Goodwill and Other”. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives using the straight-line method, and are reviewed for impairment in accordance with the provisions of ASC 360, “Property, Plant and Equipment”. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.

The Company applies Accounting Standards Update (“ASU”) 2012-02, “Intangibles – Goodwill and Other - Testing Indefinite-lived Intangible Assets for Impairment” to determine whether an impairment is required.  The guidance gives companies the option to first perform a qualitative assessment to determine whether it is more likely than not, defined as a likelihood of more than 50%, that an indefinite-lived intangible asset is impaired.  If it is determined that it is more likely than not that an impairment exists, then the company is required to estimate the fair value of the indefinite-lived intangible assets and perform a quantitative impairment test in accordance with ASC 350-30. The Company completed the required assessment as of September 30, 2015 and December 31, 2014, and noted no impairment.

From time to time the Company makes investments in product and technical opportunities that are complimentary to or enhancements to its apparel accessories business.  During the three and nine months ended September 30, 2015, the Company invested $2,460 and $22,898, respectively in the acquisition of intellectual property rights complimentary to the Company’s Talon Zipper products. During the three and nine months ended September 30, 2014, the Company invested $37,737 and $40,037, respectively in the acquisition of intellectual property rights complimentary to the Company’s Talon Zipper products.. As of September 30, 2015 and December 31, 2014 the Company had accumulated investments of $68,955 and $46,057, respectively, for intellectual property rights complimentary to the Company’s Talon Zipper products, which were not yet in service.

Intangible assets as of September 30, 2015 and December 31, 2014 are as follows:

	September 30,			December 31,
	2015			2014
Tradename - Talon trademark	$	4,110,751		$	4,110,751
Intellectual property rights		247,677			224,779
Less: Accumulated amortization (10 to 17 years)		(45,259	)		(35,446	)
Intellectual property rights, net		202,418			189,333
Intangible assets, net	$	4,313,169		$	4,300,084

Amortization expense for intangible assets was $3,271 and $9,813, respectively for the three and nine months ended September 30, 2015 and 2014.

Cost of Sales, Policy [Policy Text Block]

Costs of Goods Sold – Cost of goods sold primarily includes expenses related to inventory purchases, customs, duty, freight, overhead expenses and reserves for obsolete inventory. Overhead expenses primarily consist of quality assurance costs, warehouse and operations salaries, and other warehouse expense.

Selling, General and Administrative Expenses, Policy [Policy Text Block]

Sales and Marketing Expenses – Sales and marketing expenses primarily include sales salaries and commissions, travel and entertainment, marketing, advertising and other sales and product development related costs. Marketing and advertising efforts are expensed as incurred.

General and Administrative Expenses – General and administrative expenses primarily include administrative salaries, employee benefits, professional service fees, facility expenses, information technology costs, investor relations, travel and entertainment, depreciation and amortization, bad debts and other general corporate expenses.

Interest Expense, Policy [Policy Text Block]

Interest Expense, net – Interest expense reflects the cost of borrowings, amortization of deferred financing costs and amortization of debt discounts. Interest expense for the three and nine months ended September 30, 2015 totaled $128,988 and $330,525, respectively. Interest expense for the three and nine months ended September 30, 2014 totaled $98,402 and $320,623, respectively. Interest income consists of earnings from cash held in interest bearing accounts. Interest income for the three and nine months ended September 30, 2015 totaled $1,022 and $1,998, respectively. Interest income for the three and nine months ended September 30, 2014 totaled $1,531 and $2,867, respectively.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

The Company has operations and holds assets in various foreign countries. The local currency is the functional currency for the Company’s subsidiaries in China and India. Assets and liabilities are translated at end-of-period exchange rates while revenues and expenses are translated at the average exchange rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss) until the translation adjustments are realized. Included in accumulated other comprehensive income was a cumulative foreign currency translation gain of $106,545 and $116,175 as of September 30, 2015 and December 31, 2014, respectively.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income (loss)

Comprehensive income (loss) consists of net income (loss) and unrealized income (loss) on foreign currency translation adjustments. The foreign currency translation adjustment represents the net currency translation gains and losses related to our China and India subsidiaries, which have not been reflected in the net income for the periods presented.

The Company reports comprehensive income (loss) in accordance with Topic 220 “Comprehensive Income”, and uses the option provided under ASU 2011-05 “Presentation of Comprehensive Income” to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year.  The accounting estimates that require the Company’s most significant, difficult and subjective judgments include the valuation allowance for accounts receivable and inventory, the assessment of recoverability of long-lived assets and intangible assets, stock-based compensation and the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions). Actual results could differ materially from the Company’s estimates.

Reclassification, Policy [Policy Text Block]

Presentation

In order to facilitate the comparison of financial information, certain amounts reported in the prior year have been reclassified to conform to the current year presentation.