##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Quarter Ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 000-51624
 DOVER SADDLERY, Inc.
 (Exact name of registrant as specified in its charter)
 DELAWARE
(State of other jurisdiction of
incorporation or organization)
    
    04-3438294
(I.R.S. Employer Identification No.)
 525 Great Road, Littleton, MA 01460
(Address of principal executive offices)
 (978) 952-8062 (Registrants telephone number, including area code)
  þ o
  o o þ
  o þ




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##### 



DOVER SADDLERY, INC. AND SUBSIDIARIES
 INDEX TO QUARTERLY REPORT ON FORM 10-Q
 FOR THE QUARTER ENDED JUNE 30, 2006
 PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial Statements (unaudited)Condensed Consolidated Balance Sheets at June 30, 2006 and December 31, 2005
    
    
    3Condensed Consolidated Statements of Income for the three months ended June 30, 2006
and June 30, 2005 and the six months ended June 30, 2006 and June 30, 2005
    
    
    4Condensed Consolidated Statements of Cash Flows for the six months ended June 30,
2006 and June 30, 2005
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market RiskItem 4.
    
    Controls and ProceduresPART II  OTHER INFORMATIONItem 1
    
    Legal ProceedingsItem 1A
    
    Risk FactorsItem 2
    
    Use of Proceeds from Registered SecuritiesItem 4
    
    Submission of Matters to a Vote of Security HoldersItem 6.
    
    ExhibitsSIGNATURESEX-10.39 Commercial Lease ex. as of 3/29/06 between Marvid CrabylEX-10.40 Stock Purchase Agreement 5/19/06EX-10.41 Lease as of 6/06 Humphrey & RodgersEX-10.42 Agreement of Lease for Shopping Center 5/20/07EX-10.43 LB's of Virginia Building Lease 11/1/00EX-10.44 Lease Agreement 7/10/06 Hopkins Roads AssociatesEX-10.45 Consent and Amendment # 2 Patriot Capital Funding, Inc.EX-10.46 Waiver Letter dated June 27, 2006EX-21.1 Subsidiaries of the CompanyEX-31.1 Section 302 Certification of C.E.O.EX-31.2 Section 302 Certification of C.F.O.EX-32.1 Section 906 Certification of C.E.O. & C.F.O.




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 Item 1. Condensed Consolidated Financial Statements
 DOVER SADDLERY, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share amounts)
 June 30, 2006
    
    
    December 31, 2005(Unaudited)Current assets:Cash and cash equivalents
    
    $
    148
    
    
    $
    2,887Accounts receivable
    
    
    557
    
    
    
    160Inventory
    
    
    11,612
    
    
    
    10,072Prepaid catalog costs
    
    
    2,575
    
    
    
    1,601Prepaid expenses and other current assets
    
    
    857
    
    
    
    1,136Total current assets
    
    
    15,749
    
    
    
    15,856Property, Plant & Equipment
    
    
    1,694
    
    
    
    1,729Other assets:Deferred income tax assets
    
    
    306
    
    
    
    254Goodwill and other assets, net
    
    
    14,991
    
    
    
    13,838Total other assets
    
    
    15,297
    
    
    
    14,092Total assets
    
    $
    32,740
    
    
    $
    31,677Current liabilities:Short term bank borrowing and Current portion
of capital lease obligations
    
    $
    1,550
    
    
    $
    171Accounts payable
    
    
    2,370
    
    
    
    2,629Accrued expenses and other current liabilities
    
    
    2,076
    
    
    
    2,949Deferred income tax liability
    
    
    302
    
    
    
    274Total current liabilities
    
    
    6,298
    
    
    
    6,023Long-term liabilities:Revolving line of credit
    
    
    5,250
    
    
    
    5,000Subordinated notes payable
    
    
    3,000
    
    
    
    3,000Capital lease obligation, net of current portion
    
    
    182
    
    
    
    272Total long-term liabilities
    
    
    8,432
    
    
    
    8,272Stockholders equity:Common Stock, par value $0.0001 per share;
15,000,000 shares authorized, issued 5,074,344
as of June 30, 2006 and December 31, 2005
    
    
    1
    
    
    
    1Additional paid in capital
    
    
    43,883
    
    
    
    43,883Accumulated other comprehensive income
    
    
    33
    
    
    
    48Treasury Stock, 795,865 shares at cost
    
    
    (6,082
    )
    
    
    (6,082
    )Retained deficit
    
    
    (19,825
    )
    
    
    (20,468
    )18,010
    
    
    
    17,382Total liabilities and stockholders equity
    
    $
    32,740
    
    
    $
    31,677




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##### Table of Contents



DOVER SADDLERY, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (unaudited)
 (in thousands, except per share data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    17,781
    
    
    $
    16,334
    
    
    $
    34,814
    
    
    $
    30,580Cost of products and merchandising
    
    
    11,297
    
    
    
    10,323
    
    
    
    22,356
    
    
    
    19,495Gross margin
    
    
    6,484
    
    
    
    6,011
    
    
    
    12,458
    
    
    
    11,085Selling, general and administrative expenses
    
    
    5,501
    
    
    
    4,682
    
    
    
    10,934
    
    
    
    9,228Operating income
    
    
    983
    
    
    
    1,329
    
    
    
    1,524
    
    
    
    1,857Interest income
    
    
    11
    
    
    
    
    
    
    
    37
    
    
    
    Interest expense
    
    
    234
    
    
    
    409
    
    
    
    469
    
    
    
    801Interest expense, net
    
    
    223
    
    
    
    409
    
    
    
    432
    
    
    
    801Income before taxes
    
    
    760
    
    
    
    920
    
    
    
    1,092
    
    
    
    1,056Income tax provision
    
    
    312
    
    
    
    405
    
    
    
    449
    
    
    
    505Net income
    
    $
    448
    
    
    $
    515
    
    
    $
    643
    
    
    $
    551Earnings per share:Basic
    
    $
    0.09
    
    
    $
    0.16
    
    
    $
    0.13
    
    
    $
    0.16Diluted
    
    $
    0.09
    
    
    $
    0.11
    
    
    $
    0.12
    
    
    $
    0.12Weighted average shares outstanding:Basic
    
    
    5,074
    
    
    
    3,023
    
    
    
    5,074
    
    
    
    3,023Diluted
    
    
    5,192
    
    
    
    4,553
    
    
    
    5,203
    
    
    
    4,519




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DOVER SADDLERY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 (unaudited)
 June 30,2006
    
    2005Operating activitiesNet income
    
    $
    643
    
    
    $
    551Adjustments to reconcile net income to net cash used in operating activities:Depreciation and amortization
    
    
    297
    
    
    
    321Deferred income taxes
    
    
    (15
    )
    
    
    267Amortization of stock based compensation
    
    
    
    
    
    
    97Changes in current assets and liabilities:Accounts receivable
    
    
    (386
    )
    
    
    (650
    )Inventory
    
    
    (896
    )
    
    
    (998
    )Prepaid catalog costs and other expenses
    
    
    (719
    )
    
    
    (1,267
    )Accounts payable & short term borrowings
    
    
    856
    
    
    
    365Accrued expenses and other current liabilities
    
    
    (873
    )
    
    
    (644
    )Net cash used in operating activities
    
    
    (1,093
    )
    
    
    (1,958
    )Investing activitiesAcquisition of Dominion
    
    
    (1,522
    )
    
    
    Purchases of property and equipment
    
    
    (187
    )
    
    
    (585
    )Change in other assets
    
    
    (73
    )
    
    
    (37
    )Cash used in investing activities
    
    
    (1,782
    )
    
    
    (622
    )Financing activitiesBorrowings under revolving line of credit
    
    
    250
    
    
    
    5,200Payments under revolving line of credit
    
    
    
    
    
    
    (2,700
    )Payments of commitment and financing fees
    
    
    (24
    )
    
    
    Payments on capital leases
    
    
    (90
    )
    
    
    68Net cash provided by financing activities
    
    
    136
    
    
    
    2,568Net decrease in cash and cash equivalents
    
    
    (2,739
    )
    
    
    (12
    )Cash and cash equivalents at beginning of period
    
    
    2,887
    
    
    
    64Cash and cash equivalents at end of period
    
    $
    148
    
    
    $
    52Supplemental disclosure of cash flow informationCash paid during the period for:Interest
    
    $
    368
    
    
    $
    603Income taxes
    
    $
    66
    
    
    $
    895Supplemental disclosure of non-cash financing activitiesEquipment acquired under capital leases
    
    $
    
    
    
    $
    154




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##### Table of Contents



DOVER SADDLERY, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 A. Nature of business and basis of preparation:
    B. Acquisition:
  Business Combinations
  Total purchase price, including closing costs of approximately $56:
    
    $
    1,522Inventories
    
    
    644Other Assets
    
    
    11Total assets acquired
    
    
    655Current liabilities
    
    
    264Total liabilities assumed
    
    
    264Net assets acquired
    
    
    391Excess purchase price over the fair value of net assets acquired
    
    $
    1,131




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##### Table of Contents



Six months ended
    
    Six months ended(Pro forma, unaudited, in thousands, except per share data)
    
    June 30, 2006
    
    June 30 , 2005Net Sales
    
    $
    36,214
    
    
    $
    31,980Income
before Extraordinary Items and cumulative effect of accounting changes
    
    
    734
    
    
    
    616Net Income
    
    $
    734
    
    
    $
    616Net Income per Share
    
    $
    0.14
    
    
    $
    0.14
 C. Accounting for stock-based compensation:
 Share Based Payment Accounting for Stock issued to Employees Accounting for Stock Based Compensation
  ThreeMonths
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2005
    
    
    2005Net income, as reported:
    
    $
    515
    
    
    $
    551Add: Employee
stock-based compensation
expense included in
reported net income
    
    
    7
    
    
    
    97Deduct: Stock-based
compensation expense
determined under fair
value-based method for
all employee awards
    
    
    90
    
    
    
    180Pro forma
    
    $
    432
    
    
    $
    468Earnings per share:Basic
    
    $
    0.13
    
    
    $
    0.13Diluted
    
    
    0.09
    
    
    
    0.10
   D. Inventory:




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##### Table of Contents



E. Advertising:
 Reporting on
Advertising Costs.
 F. Comprehensive Income:
  For the Six Months ended June 30(in thousands)2006
    
    2005Net income
    
    $
    643
    
    
    $
    551Unrealized (loss)/gain on interest rate swap
    
    
    (15
    )
    
    
    47Net comprehensive income
    
    $
    628
    
    
    $
    598
 G. Earnings per share:
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Basic weighted average common shares outstanding
    
    
    5,074
    
    
    
    3,023
    
    
    
    5,074
    
    
    
    3,023Add: Dilutive effect of convertible preferred stock
    
    
    
    
    
    
    1,338
    
    
    
    
    
    
    
    1,338Dilutive effect of assumed stock option and
warrant exercises less potential incremental shares
purchased under the treasury method
    
    
    118
    
    
    
    192
    
    
    
    129
    
    
    
    158Diluted weighted average common shares outstanding
    
    
    5,192
    
    
    
    4,553
    
    
    
    5,203
    
    
    
    4,519Earnings per share:Basic
    
    $
    0.09
    
    
    $
    0.16
    
    
    $
    0.13
    
    
    $
    0.16Diluted
    
    $
    0.09
    
    
    $
    0.11
    
    
    $
    0.12
    
    
    $
    0.12
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Net Income:
    
    
    448
    
    
    
    515
    
    
    
    643
    
    
    
    551Preferred stock dividends
    
    
    
    
    
    
    (40
    )
    
    
    
    
    
    
    (80
    )Net Income available to common stockholders
    
    
    448
    
    
    
    475
    
    
    
    643
    
    
    
    471




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H. Debt:
 Revolving Credit Facility
     Subordinated Notes Payable
   I. Commitments and contingencies:
 Lease commitments
   Contingencies




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 This Quarterly Report on Form 10-Q, including the following discussion, contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve
substantial risks and uncertainties. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements. Without limiting the
generality of the
foregoing, the words projected, anticipated, planned, expected and similar expressions are
intended to identify forward-looking statements. In particular, statements regarding future
financial targets or trends are forward-looking statements. Forward-looking statements are not
guarantees of our future financial performance, and undue reliance should not be placed on them.
Our actual results, performance or achievements may differ significantly from the results,
performance or achievements discussed in or implied by the forward-looking statements. Factors that
could cause such a difference are detailed in Item 1A. Risk Factors in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2005 (fiscal 2005). We disclaim any intent or obligation
to update any forward-looking statements
 Overview
   Results of Operations
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of products and merchandising
    
    
    63.5
    
    
    
    63.2
    
    
    
    64.2
    
    
    
    63.8Gross margin
    
    
    36.5
    
    
    
    36.8
    
    
    
    35.8
    
    
    
    36.2Selling, general and administrative expenses
    
    
    30.9
    
    
    
    28.7
    
    
    
    31.4
    
    
    
    30.1Operating income
    
    
    5.6
    
    
    
    8.1
    
    
    
    4.4
    
    
    
    6.1Interest income
    
    
    0.1
    
    
    
    0.0
    
    
    
    0.1
    
    
    
    0.0Interest expense
    
    
    1.4
    
    
    
    2.5
    
    
    
    1.3
    
    
    
    2.6Interest (income) expense, net
    
    
    1.3
    
    
    
    2.5
    
    
    
    1.2
    
    
    
    2.6Income before taxes
    
    
    4.3
    
    
    
    5.6
    
    
    
    3.2
    
    
    
    3.5Income tax provision
    
    
    1.8
    
    
    
    2.5
    
    
    
    1.3
    
    
    
    1.6Net income
    
    
    2.5
    %
    
    
    3.1
    %
    
    
    1.9
    %
    
    
    1.9
    %




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales:Revenue, net  direct
    
    $
    14,893
    
    
    $
    13,443
    
    
    $
    29,856
    
    
    
    26,319Revenue, net  retail stores
    
    
    2,888
    
    
    
    2,891
    
    
    
    4,958
    
    
    
    4,261Revenue, net  total
    
    $
    17,781
    
    
    $
    16,334
    
    
    $
    34,814
    
    
    
    30,580Other operating data:Number of retail stores(2)
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4Capital expenditures
    
    
    118
    
    
    
    174
    
    
    
    187
    
    
    
    585Gross profit margin(2)
    
    
    36.5
    %
    
    
    36.8
    %
    
    
    35.8
    %
    
    
    36.2
    %EBITDA(1)
    
    
    1,130
    
    
    
    1,496
    
    
    
    1,821
    
    
    
    2,276EBITDA margin(1)
    
    
    6.36
    %
    
    
    9.16
    %
    
    
    5.23
    %
    
    
    7.44
    %
 
 (1)
    
    When we use the term EBITDA, we are referring to net income minus interest
income plus interest expense, income taxes and depreciation and amortization. We present EBITDA
because we consider it an important supplemental measure of our performance and believe it is
frequently used by securities analysts, investors and other interested parties in the evaluation of
companies in our industry.(2)
    
    Excludes the acquisition of Dominion stores on June 29, 2006. Comparison of Second Quarter Fiscal 2006 to Second Quarter Fiscal 2005
 Revenues
  Gross Profit
  Selling, General and Administrative
  Interest Expense
  Income Tax Provision
  Net Income




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##### Table of Contents



Comparison of the Six Months Ended June 30, 2006 to the Six Months Ended June 30, 2005
 Revenues
  Gross Profit
  Selling, General and Administrative
  Interest Expense
  Income Tax Provision
  Net Income
  Seasonality and Quarterly Fluctuations
   Liquidity and Capital Resources




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Operating Activities
  Investing Activities
  Financing Activities
  Revolving Credit Facility
  Senior Subordinated Note and Warrant




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Working Capital and Capital Expenditure Needs
  Contractual Obligations
  Payments Due by June 30,2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Total(in thousands)Short-term bank borrowings
    
    $
    1,395
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,395Capital leases
    
    
    155
    
    
    
    117
    
    
    
    75
    
    
    
    11
    
    
    
    
    
    
    
    358Operating leases
    
    
    1,411
    
    
    
    1,304
    
    
    
    1,207
    
    
    
    960
    
    
    
    812
    
    
    
    5,694Revolving credit facility
    
    
    
    
    
    
    5,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,250Senior subordinated notes
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    3,000Total
    
    $
    2,961
    
    
    $
    6,671
    
    
    $
    4,282
    
    
    $
    971
    
    
    $
    812
    
    
    $
    15,697
 Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
   Foreign Currency Risk
  Interest Rate Sensitivity
   
 Item 4. Controls and Procedures




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##### Table of Contents



PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings
    
 Item 1A. Risk Factors
   Our market is highly competitive and we may not continue to compete successfully.
 We may be unable to continue to open new stores and enter new markets successfully.




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Our growth may strain operations, which could adversely affect our business and financial
results.
 Our operating results may be impacted by changes in the economy.
 Our stock price may fluctuate based on market expectations.
 Our quarterly operating results are subject to significant fluctuation.
 If businesses we acquire do not perform as well as we expect or have liabilities that we are
not aware of, we could suffer consequences that would substantially reduce our revenues, earnings
and cash flows.
 
 Item 2. Use of Proceeds from Registered Securities




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Item 4. Submission of Matters to Vote of Security Holders
  (1)
    
    The stockholders elected both Class I nominees to the Board of Directors for respective
three-year terms expiring in 2009:
 DIRECTOR
    
    FOR
    
    WITHHELD
    
    ABSTAIN
    
    BROKER NON-VOTES*Gregory F. Mulligan
    
    
    4,188,677
    
    
    
    0
    
    
    
    544,877William F. Meagher,
Jr.
    
    
    4,728,574
    
    
    
    0
    
    
    
    4,980
 
 *
    
    NASDAQ rules do not permit broker voting without specific instructions from beneficial owners but
permit brokers that are members of a national securities exchange, such as brokers who are members
of the New York Stock Exchange, to follow any alternative rules of that exchange. The Company has
not been able to determine how many broker votes cast for Class I Directors were cast pursuant to
specific instructions from beneficial owners versus how many were cast by brokers pursuant to the
alternative rules of a national securities exchange such as NYSE.   
  
 (2)
    
    The stockholders ratified the appointment of Ernst & Young LLP as the Independent Registered
Public Accounting Firm for the Company:
 For
    
    
    4,732,554Against
    
    
    1,000Abstain
    
    
    0Total
    
    
    4,733,554




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##### Table of Contents



Item 6. Exhibits
 EXHIBIT LIST
 Number
    
    Description*1.1
    
    Form of Underwriting Agreement*3.1
    
    Amended and Restated Certificate of Incorporation of the Company*3.2
    
    Certificate of Amendment to Certificate of Incorporation of the Company*3.3
    
    Second Amended and Restated Certificate of Incorporation of the Company to be filed upon completion of this offering*3.4
    
    By-laws of the Company*3.5
    
    Amended and Restated By-laws of the Company to be effective upon completion of this offering*4.1
    
    Shareholders Agreement, dated as of September 17, 1998, by and among the Company, Stephen L. Day, Jonathan A.R.
Grylls, David Post, Donald Motsenbocker, Thomas Gaines, David J. Powers, James F. Powers, and Michele R. Powers*4.2
    
    First Amendment to Shareholders Agreement, dated as of August 29, 2003, by and among the Company, Stephen L. Day,
Jonathan A.R. Grylls, David Post, Thomas Gaines, David J. Powers, James F. Powers, and Michele R. Powers*4.3
    
    Second Amendment to Shareholders Agreement, dated as of August 25, 2005, by and among a majority in interest of the
Purchasers (as defined therein) and a majority in interest of the Sellers (as defined therein)*4.4
    
    Instrument of accession, dated as of September 16, 2005, signed by Citizens Ventures, Inc. and accepted by the
Company, to that certain Shareholders Agreement, dated as of September 17, 1998, by and among the Company and the
Shareholders referenced therein, as amended*4.5
    
    Form of Common Stock Certificate*4.6
    
    Warrant to purchase common stock of the Company issued to Patriot Capital Funding, Inc.*4.7
    
    Amended and Restated 11.50% Senior Secured Subordinated Note, dated September 16, 2005, issued jointly by the
Company, Dover Massachusetts and Smith Brothers, Inc. to Patriot Capital Funding, LLC I*5.1
    
    Opinion of Bingham McCutchen LLP*5.2
    
    Opinion of Preti Flaherty Beliveau Pachios & Haley LLP




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##### Table of Contents



Number
    
    Description*10.1
    
    1999 Stock Option Plan (the 1999 Plan)*10.2
    
    Form of Stock Option Agreement under the 1999 Plan*10.3
    
    2005 Equity Incentive Plan (the 2005 Plan)*10.4
    
    Form of Stock Option Agreement under the 2005 Plan*10.5
    
    Form of Restricted Stock Award Agreement under the 2005 Plan*10 .6
    
    Lease, dated as of May 29, 1997, by and between Dover Massachusetts and CE Holman, LLP*10 .7
    
    Lease, dated as of October 12, 2001, by and between David F. Post and Dover Massachusetts*10 .8
    
    Lease, dated as of March 1, 2003, by and between Smith Brothers, Inc. and JDS Properties, LLC*10.9
    
    Letter dated February 9, 2005 from the Company to JDS Properties, LLC regarding lease extension*10.10
    
    Lease, dated as of June 22, 2002, by and between Hockessin Square, L.L.C. and Dover Massachusetts*10.11
    
    Letter dated January 25, 2005 from the Company to Hockessin Square, L.L.C. regarding lease extension*10.12
    
    Lease, dated as of November 24, 2003, by and between North Conway Holdings, Inc. and Dover
Massachusetts*10.13
    
    Stock Purchase Agreement, dated as of August 14, 1998, by and among the Company, James F. Powers,
David J. Powers and Michele R. Powers*10.14
    
    First Amendment to Stock Purchase Agreement, dated as of August 14, 1998, by and among the Company,
James F. Powers, David J. Powers and Michele R. Powers*10.15
    
    Amendment to Stock Purchase Agreement, dated as of September 17, 1998, by and among the Company,
James F. Powers, David J. Powers and Michele R. Powers*10.16
    
    Amended and Restated Loan Agreement, dated as of December 11, 2003, by and between Dover
Massachusetts and Fleet National Bank*10.17
    
    Amendment to Loan Agreement, dated as of December 11, 2003, by and between Dover Massachusetts and
Fleet National Bank*10.18
    
    Amended and Restated Security Agreement, dated as of December 11, 2003, by and between Dover
Massachusetts and Fleet National Bank*10.19
    
    Amended and Restated Pledge Agreement, dated as of December 11, 2003, by and between the Company
and Fleet National Bank*10.20
    
    Shareholder Pledge Agreement, dated as of September 17, 1998, by and among Stephen L. Day, Jonathan
A.R. Grylls, David J. Powers, James F. Powers, Michele R. Powers and BankBoston, N.A.*10.21
    
    Amended and Restated Revolving Credit Note, dated as of December 11, 2003, by Dover Massachusetts
for the benefit of Fleet National Bank*10.22
    
    Letter agreement, dated as of September 16, 2005, by and between Dover Massachusetts and Bank of
America, N.A. (successor by merger to Fleet National Bank)*10.23
    
    Security Agreement, dated as of December 11, 2003, by and between Smith Brothers, Inc. and Fleet
National Bank*10.24
    
    Guaranty, dated as of December 11, 2003, by Smith Brothers, Inc. to Fleet National Bank*10.25
    
    Redemption Agreement, dated as of August 25, 2005, by and between the Company and Citizens
Ventures, Inc.*10.26
    
    Letter agreement, dated as of September 14, 2005, by and between the Company and Citizens Ventures,
Inc., amending that certain Redemption Agreement, dated as of August 26, 2005, by and between the
Company and Citizens Ventures, Inc.*10.27
    
    License Agreement, dated as of February 10, 2003, by and between Weatherbeeta PTY LTD and the
Company




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##### Table of Contents



Number
    
    Description*10.28
    
    Settlement Agreement, dated as of December 22, 2003, by and between Libertyville Saddle Shop, Inc.
and the Company*10.29
    
    Employment Agreement, dated as of September 1, 2005, by and between Stephen L. Day and the Company*10.30
    
    Employment Agreement, dated as of September 1, 2005, by and between Jonathan A.R. Grylls and the
Company*10.31
    
    Amended and Restated Subordination Agreement, dated as of September 16, 2005, by and among Bank of
America, N.A. (successor by merger to Fleet National Bank), Patriot Capital Funding, Inc.
(successor in interest to Wilton Funding, LLC) and Dover Massachusetts, acknowledged by the
Company and Smith Brothers, Inc.*10.32
    
    Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement, dated as of
September 16, 2005, by and among the Company, Dover Massachusetts, Smith Brothers, Inc., Patriot
Capital Funding, Inc. and the Purchasers referenced therein*10.33
    
    Amended and Restated Security Agreement, dated as of September 16, 2005, by and among the Company,
Dover Massachusetts, Smith Brothers, Inc. and Patriot Capital Funding, Inc.#10.34(1)
    
    Amendment No. 1 to the Employment Agreement dated as of September 1, 2005 with Stephen L. Day#10.35(2)
    
    Amendment No. 1 to the Employment Agreement dated as of September 1, 2005 with Jonathan A.R. Grylls#10.36(4)
    
    Second Amendment dated as of March 28, 2006 to Amended and Restated Loan Agreement with Bank of
America.#10.37(5)
    
    Amendment No. 1 dated as of March 28, 2006 to Amended and Restated Senior Subordinated Note and
Warrant Purchase Agreement with Patriot Capital Funding, Inc.^^10.38
    
    Agreement of Lease dated March 29, 2006 by and between the Company and Sparks Lot Seven, LLC^10.39
    
    Commercial Lease executed as of March 9, 2001 between Marvid Crabyl, LLC and Dover Saddlery, Inc.,
as amended and extended^10.40
    
    Stock Purchase Agreement dated as of May 19, 2006 among Dover Saddlery, Inc., Dover Saddlery
Retail, Inc., Old Dominion Enterprises, Inc. and Reynolds Young, as amended^10.41
    
    Lease made as of June, 2006 between Humphrey and Rodgers and Dover Saddlery Retail, Inc.^10.42
    
    Agreement of Lease for Shopping Center Space between Sequel Investors Limited Partnership and Old
Dominion Enterprises, Inc. Dated as of May 20, 1997, as amended^10.43
    
    LBs of Virginia Building Lease Agreement dated November 1, 2000, as amended^10.44
    
    Lease agreement made July 10, 2006 between Hopkins Roads Associates and Dover Saddlery Retail, Inc.^10.45(6)
    
    Consent and Amendment No. 2, dated June 29, 2006, to Amended and Restated Senior Subordinated Note
and Warrant Purchase Agreement with Patriot Capital Funding, Inc.^10.46(7)
    
    Waiver letter dated as of June 27, 2006 between Bank of America, N.A. and Dover Saddlery, Inc.#14.1(3)
    
    Code of Business Conduct and Ethics^21.1
    
    Subsidiaries of the Company*23.1
    
    Consent of Bingham McCutchen LLP (included in Exhibit 5.1)**23.2
    
    Consent of Ernst & Young LLP*23.3
    
    Consent of Preti Flaherty Beliveau Pachios & Haley PLLC (included in Exhibit 5.2)*24.1
    
    Power of Attorney^31.1
    
    Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule
15d-14(a)^31.2
    
    Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule
15d-14(a)^32.1
    
    Certification by Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant
to 18 U.S.C. Section 1350*99.1
    
    Consent of William F. Meagher, Jr.
 
 ^
    
    Filed herewith*
    
    Incorporated by reference herein to the exhibits to the Companys Registration Statement on Form S-1 (File No. 333-127888)**
    
    Incorporated by reference to the exhibit to the Companys Registration Statement on Form S-8 on April 3, 2006#
    
    Filed with the Companys Annual Report on Form 10-K for the Fiscal Year Ending December 31, 2005, on March 30, 2006^^
    
    Filed with the Companys Quarterly Report on Form 10Q for the Fiscal Quarter Ending March 31, 2006, on May 15, 2006
    
    Indicates a management contract or compensatory plan or arrangement(1)
    
    Amends Employment Agreement filed with the Companys Registration Statement on Form S-1 on August 26, 2005 as Exhibit
10.30(2)
    
    Amends Employment Agreement filed with the Companys Registration Statement on Form S-1 on August 26, 2005 as Exhibit
10.31




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##### Table of Contents



(3)
    
    Amends and restates Code of Conduct and Ethics filed with the Companys Registration Statement on Form S-1/ A on October
2, 2005 as Exhibit 14.1(4)
    
    Amends Amended and Restated Loan Agreement dated as of December 11, 2003, with Fleet National Bank, filed with the
Companys Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.16(5)
    
    Amends Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement dated as of September 16, 2005, with
Patriot Capital Funding, Inc., filed with the Companys Registration Statement on Form S-1/A on October 5, 2005 as Exhibit
10.32.(6)
    
    Amends Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement dated as of September 16, 2005, with
Patriot Capital Funding, Inc., filed with the Companys Registration Statement on Form S-1/A on October 5, 2005 as Exhibit
10.32.(7)
    
    Pertains to Amended and Restated Loan Agreement dated as of December 11, 2003, with Fleet National Bank, filed with the
Companys Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.16 Certifications31.1
    
    Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)31.2
    
    Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)32.1
    
    Certification by Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350




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##### Table of Contents



SIGNATURES
  DOVER SADDLERY, INC.Dated: August 14, 2006
    
    By:
    
    /s/ Michael W. BrunsMichael W. Bruns, Chief Financial Officer(Principal Financial Officer and Duly Authorized Officer)




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##### Table of Contents



DOVER SADDLERY, INC. AND SUBSIDIARIES
 FORM 10-Q
 FOR THE QUARTER ENDED JUNE 30, 2006
 EXHIBIT INDEX
 *1.1
    
    Form of Underwriting Agreement*3.1
    
    Amended and Restated Certificate of Incorporation of the Company*3.2
    
    Certificate of Amendment to Certificate of Incorporation of the Company*3.3
    
    Second Amended and Restated Certificate of Incorporation of the Company to be filed upon completion of this offering*3.4
    
    By-laws of the Company*3.5
    
    Amended and Restated By-laws of the Company to be effective upon completion of this offering*4.1
    
    Shareholders Agreement, dated as of
September 17, 1998, by and among the Company, Stephen L. Day, Jonathan A.R. Grylls, David Post, Donald Motsenbocker, Thomas Gaines, David J. Powers, James F. Powers, and Michele R. Powers*4.2
    
    First Amendment to Shareholders
Agreement, dated as of August 29, 2003, by and among the Company, Stephen L. Day, Jonathan A.R. Grylls, David Post, Thomas Gaines, David J. Powers, James F. Powers, and Michele R. Powers*4.3
    
    Second Amendment to Shareholders
Agreement, dated as of August 25, 2005, by and among a majority in interest of the Purchasers (as defined therein) and a majority in interest of the Sellers (as defined therein)*4.4
    
    Instrument of accession, dated as of September 16, 2005, signed by Citizens Ventures, Inc. and accepted by the
Company, to that certain Shareholders Agreement, dated as of
September 17, 1998, by and among the Company and the Shareholders referenced therein, as amended*4.5
    
    Form of Common Stock Certificate*4.6
    
    Warrant to purchase common stock of the Company issued to Patriot Capital Funding, Inc.*4.7
    
    Amended and Restated 11.50% Senior
Secured Subordinated Note, dated September 16, 2005, issued jointly by the Company, Dover Massachusetts and Smith Brothers, Inc. to Patriot Capital Funding, LLC I*5.1
    
    Opinion of Bingham McCutchen LLP*5.2
    
    Opinion of Preti Flaherty Beliveau Pachios & Haley LLP
 *10.1
    
    1999 Stock Option Plan (the 1999 Plan)*10.2
    
    Form of Stock Option Agreement under the 1999 Plan*10.3
    
    2005 Equity Incentive Plan (the 2005 Plan)*10.4
    
    Form of Stock Option Agreement under the 2005 Plan*10.5
    
    Form of Restricted Stock Award Agreement under the 2005 Plan*10.6
    
    Lease, dated as of May 29, 1997, by and between Dover Massachusetts and CE Holman, LLP*10.7
    
    Lease, dated as of October 12, 2001, by and between David F. Post and Dover Massachusetts*10.8
    
    Lease, dated as of March 1, 2003, by and between Smith Brothers, Inc. and JDS Properties, LLC*10.9
    
    Letter dated February 9, 2005 from the Company to JDS Properties, LLC regarding lease extension*10.10
    
    Lease, dated as of June 22, 2002, by and between Hockessin Square, L.L.C. and Dover Massachusetts*10.11
    
    Letter dated January 25, 2005 from the Company to Hockessin Square, L.L.C. regarding lease extension*10.12
    
    Lease, dated as of November 24, 2003, by and between North Conway Holdings, Inc. and Dover
Massachusetts*10.13
    
    Stock Purchase Agreement, dated as of August 14, 1998, by and among the Company, James F. Powers,
David J. Powers and Michele R. Powers*10.14
    
    First Amendment to Stock Purchase Agreement, dated as of August 14, 1998, by and among the Company,
James F. Powers, David J. Powers and Michele R. Powers*10.15
    
    Amendment to Stock Purchase Agreement, dated as of September 17, 1998, by and among the Company,
James F. Powers, David J. Powers and Michele R. Powers*10.16
    
    Amended and Restated Loan Agreement, dated as of December 11, 2003, by and between Dover
Massachusetts and Fleet National Bank*10.17
    
    Amendment to Loan Agreement, dated as of December 11, 2003, by and between Dover Massachusetts and
Fleet National Bank*10.18
    
    Amended and Restated Security Agreement, dated as of December 11, 2003, by and between Dover
Massachusetts and Fleet National Bank




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##### Table of Contents



*10.19
    
    Amended and Restated Pledge Agreement, dated as of December 11, 2003, by and between the Company
and Fleet National Bank*10.20
    
    Shareholder Pledge Agreement, dated as of September 17, 1998, by and among Stephen L. Day, Jonathan
A.R. Grylls, David J. Powers, James F. Powers, Michele R. Powers and BankBoston, N.A.*10.21
    
    Amended and Restated Revolving Credit Note, dated as of December 11, 2003, by Dover Massachusetts
for the benefit of Fleet National Bank*10.22
    
    Letter agreement, dated as of September 16, 2005, by and between Dover Massachusetts and Bank of
America, N.A. (successor by merger to Fleet National Bank)*10.23
    
    Security Agreement, dated as of December 11, 2003, by and between Smith Brothers, Inc. and Fleet
National Bank*10.24
    
    Guaranty, dated as of December 11, 2003, by Smith Brothers, Inc. to Fleet National Bank*10.25
    
    Redemption Agreement, dated as of August 25, 2005, by and between the Company and Citizens
Ventures, Inc.*10.26
    
    Letter agreement, dated as of September 14, 2005, by and between the Company and Citizens Ventures,
Inc., amending that certain Redemption Agreement, dated as of August 26, 2005, by and between the
Company and Citizens Ventures, Inc.*10.27
    
    License Agreement, dated as of February 10, 2003, by and between Weatherbeeta PTY LTD and the
Company




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##### Table of Contents



Number
    
    Description*10.28
    
    Settlement Agreement, dated as of December 22, 2003, by and between Libertyville Saddle Shop, Inc.
and the Company*10.29
    
    Employment Agreement, dated as of September 1, 2005, by and between Stephen L. Day and the Company*10.30
    
    Employment Agreement, dated as of September 1, 2005, by and between Jonathan A.R. Grylls and the
Company*10.31
    
    Amended and Restated Subordination Agreement, dated as of September 16, 2005, by and among Bank of
America, N.A. (successor by merger to Fleet National Bank), Patriot Capital Funding, Inc.
(successor in interest to Wilton Funding, LLC) and Dover Massachusetts, acknowledged by the
Company and Smith Brothers, Inc.*10.32
    
    Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement, dated as of
September 16, 2005, by and among the Company, Dover Massachusetts, Smith Brothers, Inc., Patriot
Capital Funding, Inc. and the Purchasers referenced therein*10.33
    
    Amended and Restated Security Agreement, dated as of September 16, 2005, by and among the Company,
Dover Massachusetts, Smith Brothers, Inc. and Patriot Capital Funding, Inc.#10.34(1)
    
    Amendment No. 1 to the Employment Agreement dated as of September 1, 2005 with Stephen L. Day#10.35(2)
    
    Amendment No. 1 to the Employment Agreement dated as of September 1, 2005 with Jonathan A.R. Grylls#10.36(4)
    
    Second Amendment dated as of March 28, 2006 to Amended and Restated Loan Agreement with Bank of
America.#10.37(5)
    
    Amendment No. 1 dated as of March 28, 2006 to Amended and Restated Senior Subordinated Note and
Warrant Purchase Agreement with Patriot Capital Funding, Inc.^^10.38
    
    Agreement of Lease dated March 29, 2006 by and between the Company and Sparks Lot Seven, LLC^10.39
    
    Commercial Lease executed as of March 9, 2001 between Marvid Crabyl, LLC and Dover Saddlery, Inc.,
as amended and extended^10.40
    
    Stock Purchase Agreement dated as of May 19, 2006 among Dover Saddlery, Inc., Dover Saddlery
Retail, Inc., Old Dominion Enterprises, Inc. and Reynolds Young, as amended^10.41
    
    Lease made as of June, 2006 between Humphrey and Rodgers and Dover Saddlery Retail, Inc.^10.42
    
    Agreement of Lease for Shopping Center Space between Sequel Investors Limited Partnership and Old
Dominion Enterprises, Inc. Dated as of May 20, 1997, as amended^10.43
    
    LBs of Virginia Building Lease Agreement dated November 1, 2000, as amended^10.44
    
    Lease agreement made July 10, 2006 between Hopkins Roads Associates and Dover Saddlery Retail, Inc.^10.45(6)
    
    Consent and Amendment No. 2, dated June 29, 2006, to Amended and Restated Senior Subordinated Note
and Warrant Purchase Agreement with Patriot Capital Funding, Inc.^10.46(7)
    
    Waiver letter dated as of June 27, 2006 between Bank of America, N.A. and Dover Saddlery, Inc.#14.1(3)
    
    Code of Business Conduct and Ethics^21.1
    
    Subsidiaries of the Company*23.1
    
    Consent of Bingham McCutchen LLP (included in Exhibit 5.1)**23.2
    
    Consent of Ernst & Young LLP*23.3
    
    Consent of Preti Flaherty Beliveau Pachios & Haley PLLC (included in Exhibit 5.2)*24.1
    
    Power of Attorney^31.1
    
    Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule
15d-14(a)^31.2
    
    Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule
15d-14(a)^32.1
    
    Certification by Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant
to 18 U.S.C. Section 1350*99.1
    
    Consent of William F. Meagher, Jr.
 
 ^
    
    Filed herewith^^
    
    Filed with the Companys Quarterly Report on Form 10Q for the Fiscal Quarter Ending March 31, 2006, on May 15, 2006*
    
    Incorporated by reference herein to the exhibits to the Companys Registration Statement on Form S-1 (File No. 333-127888)**
    
    Incorporated by reference to the exhibit to the Companys Registration Statement on Form S-8 on April 3, 2006#
    
    Filed with the Companys Annual Report on Form 10-K for the Fiscal Year Ending December 31, 2005, on March 30, 2006
    
    Indicates a management contract or compensatory plan or arrangement(1)
    
    Amends Employment Agreement filed with the Companys Registration Statement on Form S-1 on August 26, 2005 as Exhibit
10.30(2)
    
    Amends Employment Agreement filed with the Companys Registration Statement on Form S-1 on August 26, 2005 as Exhibit
10.31




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##### Table of Contents



(3)
    
    Amends and restates Code of Conduct and Ethics filed with the Companys Registration Statement on Form S-1/ A on October
2, 2005 as Exhibit 14.1(4)
    
    Amends Amended and Restated Loan Agreement dated as of December 11, 2003, with Fleet National Bank, filed with the
Companys Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.16(5)
    
    Amends Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement dated as of September 16, 2005, with
Patriot Capital Funding, Inc., filed with the Companys Registration Statement on Form S-1/A on October 5, 2005 as Exhibit
10.32.(6)
    
    Amends Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement dated as of September 16, 2005, with
Patriot Capital Funding, Inc., filed with the Companys Registration Statement on Form S-1/A on October 5, 2005 as Exhibit
10.32.(7)
    
    Pertains to Amended and Restated Loan Agreement dated as of December 11, 2003, with Fleet National Bank, filed with the
Companys Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.16
 Certifications:
 31.1
    
    Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)31.2
    
    Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)32.1
    
    Certification by Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350