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OurPet’s Company (OPCO) Poised For Strong Holiday Sales on Strength of Innovative Designs, Growing Brand Presence & New Product Debuts

With the 2015-2016 National Pet Owners Survey now out from the American Pet Products Association (APPA), we see a healthy climb in pet ownership has taken place during the past two decades, with penetration rising to nearly 65 percent. That’s some 80 million households, over 10 percent of whom are first-time pet owners. Moreover, the majority of those new pet owners are aged 18 to 50 (Millennial and Gen X) and they apparently like to spend more on their pets – whether it’s on gadgets, toys and gifts, or things like trips to the vet. This data represents a primary force vector that is fueling what was seen as a $73 billion pet products and services market last year, according to experts at market research firm Packaged Facts.

Given that the APPA data indicates U.S. households collectively own nearly 86 million cats and 78 million dogs, with a reported annual spend of around $28 and $47 respectively on toys, we have toy markets worth somewhere in the ballpark of $2.4 billion for cats and $3.7 billion for dogs. The comparatively more conservative APPA boil-down from diverse industry sources estimates that some $61 billion will be spent on pets this year in the U.S. and one of the major driving factors continues to be the growing body of scientific data that shows pet ownership is good for human health. In fact, 64 percent of respondents in the APPA data indicated health benefits from pet ownership were important to them.

According to data from the APPA report and non-profit research and education organization HABRI (Human-Animal Bond Research Initiative), there is a growing number of studies detailing the health benefits to humans of the human-animal bond. In fact, 97 percent of the 1,000 doctors polled were convinced that there are valuable health benefits to pet ownership and would recommend it to patients. One of the classic examples here is the University of Minnesota’s Stroke Research Center study that tracked over 4,400 Americans aged 30 to 75 over a decade, finding significantly lower risk of heart attack (40%) and heart disease (30%) among those who owned and played with a cat routinely. Stress relief is just the tip of the iceberg of course and the health benefits of pet ownership range from enhancing social interaction skills (particularly among children with autism and elderly folks with dementia), to boosting immune function.

One leading theory about a big part of the reason the human-animal bond is so good for us, is that playing with pets taps into countless centuries of evolved biochemistry from associating with animals in this way, stimulating our body to (among other things) release oxytocin, a powerful hormone made by the hypothalamus. The hypothalamus actually links the endocrine system to the central nervous system via the pituitary gland where oxytocin is stored, and is the center of the limbic system, or paleomammalian brain, the seat of emotional life and a core driver of memory formation.

In much the same way that we humans are wired to play with pets and enjoy it, cats and dogs are similarly adapted on a cellular level to benefit from playing with us. But deep down inside, the undomesticated wild animal still lives on in our pets, and that is one major reason why OurPet’s Company (OTCQX: OPCO) took home the New Product Showcase Award in the Cat Product Category at this year’s massive SuperZoo industry trade show for retailers organized by the World Pet Association. The company was awash in accolades as its new Catty Whack® hide and seek action game for cats wowed those in attendance. The Catty Whack taps into a feline’s deep-seated need to hunt for prey, brilliantly simulating what is appropriate to the cats natural instincts with a quick little feather wand that darts in and out of a number of holes around the perimeter of the small, circular floor device. This randomized darting is accompanied by timed bursts of audio from the company’s patented electronic RealMouse® sound, resulting in a captivating experience for cats that is also highly entertaining to watch.

With non-skid rubber feet and a carpeted scratching area for cats to get out their punchiness on, the Catty Whack elegantly showcases OPCO’s grasp of both design and animal psychology, marking the latest and greatest in a long string of superb concept executions. Sales are improving for OPCO as conversion to the Pet Zone brand nears completion around the end of the year and the company anticipates a very robust holiday season for its numerous offerings, which are sold nationwide at leading retailers, as well as at etailers like From high-quality stainless steel bowls with bonded rubber bottoms and elevated feeder stands like the Designer Diner™ and Barking Bistro™, to a full line of litter boxes ranging up to its self-cleaning SmartScoop Automatic Litter Box, OPCO is really the only compelling pure play designer in this market that investors have access to.

With a strong mind to developing tight IP around its mounting portfolio of toys, as well as feeding and waste management solutions, OPCO is looking to take its established ability to innovate and capture market share through compellingly higher value products, and grow the company towards an ever-larger retail presence. An IP book with over 160 individual patents is quite an arsenal for OPCO to have at its command along this journey and this same IP position also forms a highly effective defensive emplacement for the business model against product encroachment by competitors in the retail space.

Record Q3 net revenues reported in November of around $6 million, and net income ($410,450) that was up 428 percent year-over-year, underscore OPCO’s robust sales growth, driven in large part by its cat toys and bowls/feeder lines. The company’s shrewd defense of its core IP is evident from the recent Loving Pets Corporation patent infringement settlement in October (529 utility patent, covering feeding dish with rubber on bottom that does not extend up the sidewall) and the company actually reported nearly $15,000 in other income during Q3, a figure which more than doubled year-over-year on the strength of patent infringement settlements.

Helmed by Dr. Steven Tsengas, a Fellow at the Ohio Academy of Science, as well as the National Inventors Hall of Fame and the American Society of Patent Holders, OurPet’s Company has the visionary muscle to continue to capture market share on the strength of its innovation and design. Dr. Tsengas is a technical savant and serial entrepreneur with over 75 utility and design patents under his belt, as well as the personal founding of over half a dozen successful high tech and consumer product companies since 1976, and he has even helped provide financial and managerial overwatch for several other start-ups besides. The entire OPCO team measures up to the captain of the ship and the latest word out of OPCO is that the company anticipates launching a few new trend-setting products over the next several quarters. Investors should keep an eye out for new product announcements and familiarize themselves with the product lineup to get a better sense of the company’s position.

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