Gross Margin close to breakeven in the fourth quarter 2010.

Delray Beach, FL – Pet Airways, Inc. (OTCQB: PAWS), the world’s only airline designed specifically for the comfortable and safe transportation of pets, reported results for its fourth quarter and the year ended December 31, 2010.

Andrew Warner, President and CFO said, “We are pleased that we generated record revenues in the fourth quarter and that our gross margin was close to breakeven. We continued to show significant revenue growth both year over year and sequentially reflecting continuing strong demand for our services and ended the year with over $1.5 million in cash and cash equivalents.”

Dan Wiesel, Chairman and CEO of Pet Airways, Inc. said, “2010 was an outstanding year that gives us a solid base for 2011. The growth in full year revenues illustrates the demand we are seeing and we look forward to continuing to grow the markets we serve and opening Pet Lounges in more cities in 2011.”

Highlights for the Fourth Quarter Ended December 31, 2010

• •Revenue for the fourth quarter of 2010 was $476,000, compared to $382,000 in the fourth quarter of 2009, an increase of approximately 25 percent.
• •Gross loss decreased approximately 90 percent to $(5,500) for the fourth quarter of 2010 compared to$(57,000) in the fourth quarter of 2009.
• •Net loss for the fourth quarter of 2010 was $(1,419,000) or $(0.04) per share, compared to net loss of $(432,000), or $(0.02) per share in the fourth quarter of 2009. Net loss for the fourth quarter of 2010 included $54,000 of non-cash stock based compensation expense to a non-employee.

Highlights for the Year Ended December 31, 2010

• •Revenue increased approximately 114 percent to $1,348,000, compared to $629,000 in 2009.
• •Net loss for 2010 was $(4,056,000) or $(0.13) per share, compared to a net loss of $(1,219,000), or $(0.05) per share for 2009.
• •Net loss for 2010 included approximately $1,261,000 or $0.04 per share of non-cash stock based compensation expenses, $362,000 in one-time cost related to completing our reverse acquisition and $141,000 in initial public company reporting costs. No non-cash stock based compensation expense was recorded in 2009.