Big Dog Holdings, Inc. first quarter consolidated net sales were $38.7 million, a 23% increase, as compared with $31.3 million in the first quarter 2005. Consolidated net sales increased primarily due to the addition of 63 new Walking Company stores which includes 45 Steve Shoes stores, an acquisition that closed in January this quarter.

The Company had a total of 304 stores opened (167 Big Dog stores and 137 TWC stores) at the end of the period, as compared with 254 stores opened on March 31, 2005 (180 Big Dog stores and 74 TWC stores). Comparable retail store sales increased 0.8% for the quarter, comprised of a 7.8% increase for TWC chain and 7.4% decline for the Big Dog chain. Total consolidated gross profit for the quarter increased to 52.0% of net sales or $20,097,000 as compared with 51.8% of net sales or $16,227,000 in the first quarter 2005. The overall dollar increase and percentage increase in consolidated gross profit is the result of contributions from TWC chain.

Consolidated operating expenses in the first quarter 2006 were $24,886,000 or 64.4% of sales compared to $20,010,000 or 63.8% in 2005. The percentage increase in consolidated operating expenses primarily relates to Big Dogs' smaller revenue base, increase in depreciation and amortization and the Steve's Shoes acquisition. Consolidated operating loss for the first quarter 2006 was $4.8 million compared to $3.8 million for the first quarter 2005. The consolidated net loss per share for the first quarter 2006 increased to 35 cents per share, as compared with a consolidated net loss of 26 cents per share for the first quarter 2005.

Andrew Feshbach, Chief Executive Officer, stated, “We had a $1,000,000 increase in our operating loss, or $600,000 EBITDA decrease, this quarter versus last year which is primarily the result of an increase in depreciation, the decline in our Big Dogs business, and initial losses relating to our Steve Shoes acquisition. It should be noted that our first quarter results do not include sales generated by the Easter Holiday since the holiday fell in April and in our second quarter. Our second quarter business continues to reflect a similar trend as experienced in the first quarter.”

The Company recently signed a 10 year lease on a build to suit 229,500 square foot distribution center just outside of Charlotte, North Carolina. The facility is scheduled to come on line and transition our current 143,000 square foot distribution center located in Santa Fe Springs, California during the fourth quarter 2006. The Company will begin shipping from its new distribution center in January 2007 and is estimating a $4 million capital expenditures budget for this project. The new facility will provide additional capacity for the Company's continued growth as well as achieve cost efficiencies not available in our current distribution center.


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

                                           Three Months Ended
                                               March 31,
                             ---------------------------------------------
                                     2006                    2005
                             ---------------------   ---------------------

NET SALES                    $ 38,671,000    100.0%  $ 31,345,000   100.0%
COST OF GOODS SOLD             18,574,000     48.0%    15,118,000    48.2%
                             ------------  -------   ------------  ------
GROSS PROFIT                   20,097,000     52.0%    16,227,000    51.8%
                             ------------  -------   ------------  ------
OPERATING EXPENSES:
 Selling, marketing and
  distribution                 21,540,000     55.7%    17,419,000    55.6%
 General and administrative     2,020,000      5.2%     1,639,000     5.2%
 Depreciation and
  amortization                  1,326,000      3.4%       952,000     3.0%
                             ------------  -------   ------------  ------
   Total operating expenses    24,886,000     64.4%    20,010,000    63.8%
                             ------------  -------   ------------  ------
LOSS FROM OPERATIONS           (4,789,000)   (12.4%)   (3,783,000)  (12.1%)
INTEREST INCOME                     2,000      0.0%        40,000     0.1%
INTEREST EXPENSE                 (269,000)    (0.7%)     (151,000)   (0.5%)
                             ------------  -------   ------------  ------
LOSS BEFORE BENEFIT
 FROM INCOME TAXES             (5,056,000)   (13.1%)   (3,894,000)  (12.4%)
BENEFIT FROM INCOME
 TAXES                         (1,896,000)    (4.9%)   (1,480,000)   (4.7%)
                             ------------  -------   ------------  ------
NET LOSS                     $ (3,160,000)    (8.2%) $ (2,414,000)   (7.7%)
                             ============  =======   ============  ======
NET LOSS PER SHARE
 BASIC                       $      (0.35)           $      (0.26)
                             ============            ============
 DILUTED                     $      (0.35)           $      (0.26)
                             ============            ============

WEIGHTED AVERAGE SHARES
 OUTSTANDING:

 BASIC                          9,092,000               9,180,000
                             ============            ============
 DILUTED                        9,092,000               9,180,000
                             ============            ============