Big Dog Holdings, Inc., for the quarter ended June 30, 2006, consolidated net sales were $53.2 million, as compared with $43.4 million in 2005, a consolidated sales increased 22%. This was primarily due to the addition of 56 new The Walking Company (“TWC”) stores including 35 Steve’s Shoes stores, which were acquired out of bankruptcy in January of this year and have been in the process of being converted into TWC stores.

The Company had a total of 294 stores opened (161 Big Dog stores and 133 TWC stores) at the end of the period, as compared with 258 stores opened on June 30, 2005 (181 Big Dog stores and 77 TWC stores). Comparative retail store sales increased 0.4% for the second quarter 2006 (5.9% increase for the TWC chain and 5.2% decline for the Big Dogs chain.) Total consolidated gross profit was 55.3% of sales or $29,383,000 in the second quarter 2006, as compared with 56.8% of net sales or $24,680,000 in the second quarter 2005. The overall dollar increase in consolidated gross profit is the result of increased sales as well as an increase in margin contribution from TWC. Big Dogs margin contribution for the period decreased to 60.1% as compared to last year’s margin contribution of 61.7% and the gross margin for the TWC chain increased to 52.4% as compared to 51.8% for 2005.

Consolidated operating expenses in the second quarter 2006 were $27,844,000 or 52.4% of sales, compared to $21,613,000 or 49.8% in the second quarter 2005. Consolidated operating income for the second quarter 2006 was $1,539,000, compared to $3,067,000 for the second quarter 2005. The increase in such expenses as a percentage of sales, and the decrease in operating income, are attributable to the reduction in Big Dog revenue and contribution and the building of our corporate overhead structure for anticipated future growth of TWC, as well as continue turnaround and integration of the Steve’s Shoes operations into TWC. As a result, the consolidated fully diluted net income per share for the second quarter 2006 decreased to $.06 per share, as compared with $.18 for the second quarter 2005.

Andrew Feshbach, Chief Executive Officer, stated, “We are pleased with the progress we are making with TWC and laying the foundation for future growth. The Steve’s Shoes turnaround and integration is on track and we expect to see improvements this fall. TWC business continues to trend in the third quarter as experienced earlier this year. We believe Big Dog’s outlet-based business is being impacted by the increase in gas prices and that its negative trend will continue into the year and could possibly decline further.”

Other Business

The Company anticipates that by the end of 2006 it will have doubled its revenue of TWC in a period of two years and that by 2010 will double its 2006 TWC store base to approximately 300 stores. Additionally, Mr. Feshbach stated that TWC has experienced positive comparative store sales for 30 consecutive months and that the Footwork’s stores acquired last year, although not currently included in TWC’s comparative store base, have trended monthly positive sales increase this year.

                  BIG DOG HOLDINGS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)


                        Three Months Ended           Six Months Ended
                             June 30,                    June 30,
                    ------------  ------------  ------------  ------------
                        2006          2005          2006          2005
                    ------------  ------------  ------------  ------------

NET SALES           $ 53,178,000  $ 43,441,000  $ 91,848,000  $ 74,786,000
COST OF GOODS SOLD    23,795,000    18,761,000    42,368,000    33,879,000
                    ------------  ------------  ------------  ------------
GROSS PROFIT          29,383,000    24,680,000    49,480,000    40,907,000
                    ------------  ------------  ------------  ------------
OPERATING EXPENSES:
 Selling, marketing
  and distribution    24,212,000    18,465,000    45,751,000    35,884,000
 General and
  administrative       2,101,000     2,178,000     4,122,000     3,818,000
 Depreciation and
  amortization         1,531,000       970,000     2,857,000     1,922,000
                    ------------  ------------  ------------  ------------
   Total operating
    expenses          27,844,000    21,613,000    52,730,000    41,624,000
                    ------------  ------------  ------------  ------------
INCOME (LOSS) FROM
 OPERATIONS            1,539,000     3,067,000    (3,250,000)     (717,000)
INTEREST INCOME            2,000         1,000         4,000        41,000
INTEREST EXPENSE        (516,000)     (297,000)     (785,000)     (448,000)
                    ------------  ------------  ------------  ------------
INCOME (LOSS)
 BEFORE PROVISION
 (BENEFIT) FOR
 INCOME TAXES          1,025,000     2,771,000    (4,031,000)   (1,124,000)
PROVISION (BENEFIT)
 FOR INCOME TAXES        385,000     1,053,000    (1,512,000)     (427,000)
                    ------------  ------------  ------------  ------------
NET INCOME (LOSS)   $    640,000  $  1,718,000  $ (2,519,000) $   (697,000)
                    ============  ============  ============  ============
NET INCOME (LOSS)
 PER SHARE
  BASIC             $       0.07  $       0.19  $      (0.28) $      (0.08)
                    ============  ============  ============  ============
  DILUTED           $       0.06  $       0.18  $      (0.28) $      (0.08)
                    ============  ============  ============  ============

WEIGHTED AVERAGE
 SHARES OUTSTANDING:

  BASIC                9,177,000     9,187,000     9,135,000     9,183,000
                    ============  ============  ============  ============
  DILUTED             10,308,000     9,760,000     9,135,000     9,183,000
                    ============  ============  ============  ============