OurPet's Company Reports 2008 Third-Quarter and Nine-Months Financial Results

 | Source: OurPet's OurPet's

FAIRPORT HARBOR, OH--(Marketwire - October 27, 2008) - OurPet's Company (OTCBB: OPCO), a growing designer, developer, producer and marketer of accessory and consumable pet products, today reported financial results for the 2008 third quarter and nine months ended September 30, 2008.

Net revenues for the 2008 third quarter increased 37.0 percent to $3,328,024 from $2,429,749 in the same period a year ago. Gross margin, as a percent of sales for the 2008 third quarter, increased 4.6 percentage points to 29.6 percent, from 25.0 percent in the 2007 third quarter. This improvement in gross margin was a result of the Company's continuous cost improvement efforts, emphasis on selling higher margin products and selective price increases. The Company expects to maintain or enhance the improved gross margin during the 2008 fourth quarter.

Income before litigation expense for the 2008 third quarter increased 1,459.9 percent to $191,539, compared to $12,279 for the 2007 third quarter. After litigation expense the net loss for the 2008 third quarter was $617,589, or a loss of $0.04 per share, compared to net income of $3,244, or $0.00 per diluted share for the same period in 2007. Earnings, before interest, taxes, depreciation and amortization (EBITDA), before litigation expense for the 2008 third quarter, increased 115.6 percent to $359,322, compared to $166,661 for the 2007 third quarter.

Net revenues for the 2008 nine months increased 18.1 percent to $9,248,892 from $7,829,931 in the same period a year ago. Gross margin, as a percent of sales for the 2008 nine months, increased 1.8 percentage points to 28.7 percent from 26.9 percent in the 2007 nine months. Income before litigation expense for the 2008 nine months increased to $479,445 compared to $315,842 for the 2007 nine months, or an improvement of $163,603, or 51.8 percent. After litigation expense the net loss for the 2008 nine months was $1,778,896, or a loss of $0.12 per share, compared to net income of $290,769, or $0.01 per diluted share for the same period in 2007. Earnings, before interest, taxes, depreciation and amortization (EBITDA), before litigation expense for the 2008 nine months, increased 24.7 percent to $976,491, compared to $783,308 for the 2007 nine months.

Dr. Steven Tsengas, President and CEO, stated, "We are pleased about our growth for the 2008 third quarter and nine months. We achieved increases in sales and income before litigation expense for both periods despite a difficult business environment for many of our major customers. The increase in sales for both periods was the result of improved sales to our non-major accounts, new customers, new product introductions and exports to Canada and overseas.

"As we expected, our net income for the third quarter and nine months were adversely affected by the litigation expenses that we have incurred in defending the OurPet's SmartScoop® (www.smartscoop.com) against the patent infringement lawsuits filed against us by a competitor. We feel that such charges are without merit and believe that we should prevail in the International Trade Commission trial that occurred on August 29, 2008. A decision by the ITC judge is anticipated on or before December 2, 2008. With reduced ITC litigation expense and seasonally increased sales, we are optimistic that the Company will return to profitability in the 2008 fourth quarter and that results will compare favorably to the 2007 fourth quarter. It is difficult to predict additional litigation expenses beyond the ITC case decision date since the actions of our competitor are unknown.

"The litigation expenses have been primarily funded with external sources of subordinated debt with warrants, thereby reducing shareholder dilution compared to the issuance of additional common shares. The cost and manpower resources required for the litigation have not significantly impacted OurPet's management's focus and commitment to grow OurPet's. Approximately sixty new products will be introduced at the annual Global Pet Exposition that will be held in Orlando, FL in February 2009. OurPet's is the recognized innovative pet product company with a rich pipeline of new products," concluded Dr. Tsengas.

About OurPet's Company

OurPet's designs, produces and markets a broad line of innovative, high-quality accessory and consumable pet products in the U.S. and overseas. For more information about the Company and its products visit our Websites www.ourpets.com, www.smartscoop.com, www.ecoPureNaturals.com and www.playnsqueak.com.

Certain of the matters set forth in this press release are forward-looking and involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: business conditions and growth in the industry; general economic conditions; addition or loss of significant customers; the loss of key personnel; product development; competition; risks of doing business abroad; foreign government regulations; fluctuations in foreign rates; rising costs for raw materials and the unavailability of sources of supply; the timing of orders booked; and the other risks that are described from time to time in OurPet's SEC reports.

--Financial Results Follow-- 

                    OURPET'S COMPANY AND SUBSIDIARIES
                      CONSOLIDATED OPERATING RESULTS


                    For the Nine Months Ended     For the Quarter Ended
                          September 30,               September 30,
                    --------------------------  --------------------------
                        2008          2007          2008          2007
                    ------------  ------------  ------------  ------------

Net revenue         $  9,248,892  $  7,829,931  $  3,328,024  $  2,429,749
Cost of goods sold     6,598,718     5,722,949     2,341,876     1,823,093
                    ------------  ------------  ------------  ------------
     Gross profit
      on sales         2,650,174     2,106,982       986,148       606,656
Selling, general
 and administrative
 expenses              2,026,829     1,669,457       740,891       549,771
                    ------------  ------------  ------------  ------------
     Income from
      operations         623,345       437,525       245,257        56,885
Other income and
 expense, net               (812)       (2,070)           (1)           (1)
Interest expense         144,712       123,753        53,719        44,607
                    ------------  ------------  ------------  ------------
  Income before
   litigation
   expense              479,445       315,842       191,539        12,279
Litigation expense     2,258,341        25,073       809,128         9,035
                    ------------  ------------  ------------  ------------
     Net income
      (loss)        $ (1,778,896) $    290,769  $   (617,589) $      3,244
                    ============  ============  ============  ============


Basic and Diluted
 Net Income (Loss)
 Per Common Share
 After Dividend
 Requirements
 For Preferred
 Stock              $      (0.12) $       0.01  $      (0.04) $          -
                    ============  ============  ============  ============

 Weighted average
  number of common
  and equivalent shares
  outstanding used
  to calculate
  basic and diluted
  earnings per
  share               15,245,736    17,782,896    15,246,984    18,166,595
                    ============  ============  ============  ============




                    OURPET'S COMPANY AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS


                                                September 30,  December 31,
                                                    2008          2007
                                                ------------- -------------
ASSETS
   Cash and equivalents                         $     207,865 $      28,843
   Receivables, net                                 1,606,897     1,239,410
   Inventories                                      3,506,707     3,395,512
   Prepaid expenses                                   120,327        91,069
                                                ------------- -------------
      Total current assets                          5,441,796     4,754,834
   Property and equipment, net                      2,166,717     2,309,529
   Other                                              343,483       337,967
                                                ------------- -------------

      Total assets                              $   7,951,996 $   7,402,330
                                                ============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
   Notes payable                                $   2,000,000 $   1,800,000
   Current maturities of long-term debt               147,844       232,857
   Accounts payable                                 2,293,281     1,170,225
   Accrued expenses                                   279,004       122,813
                                                ------------- -------------
      Total current liabilities                     4,720,129     3,325,895
   Long-term debt                                   1,161,108       250,655
   Stockholders' Equity                             2,070,759     3,825,780
                                                ------------- -------------

       Total liabilities and stockholders'
        equity                                  $   7,951,996 $   7,402,330
                                                ============= =============

Contact Information: CONTACT: OurPet's, Company Dr. Steven Tsengas (440) 354-6500 (Ext. 111) -or- INVESTOR RELATIONS: SM Berger & Company, Inc. Andrew Berger (216) 464-6400