Note 10 - Commitments and Contingencies

12 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

( 10 ) Commitments and Contingencies

Legal Matters and Routine Proceedings

On

August 25, 2017

and

September 7, 2017,

shareholders filed putative securities class action lawsuits in the United States District Court for the Southern District of Florida, which were subsequently consolidated, against PetMed Express, Inc. (the “Company”) and the Company’s principal executive officers,

one

of whom is also a director. Relying exclusively on a false and defamatory, anonymous “report” posted on

August 23, 2017

on the Aurelius Value website the plaintiffs alleged violations of Sections

10

(b) and

20

(a) of the Securities Exchange Act of

1934.

The Company has always denied and continues to deny the plaintiffs’ unfounded accusations. The plaintiffs investigated their claims, and on or about

January 19, 2018,

the plaintiffs voluntarily dismissed the consolidated lawsuit without prejudice.

The Company has settled complaints that had been filed with various states’ pharmacy boards in the past. There can be

no

assurances made that other states will

not

attempt to take similar actions against the Company in the future. The Company initiates litigation to protect its trade or service marks. There can be

no

assurance that the Company will be successful in protecting its trade or service marks. Legal costs related to the above matters are expensed as incurred.

Employment Agreements

On

January 29, 2016,

the Company amended the existing Executive Employment Agreement of Menderes Akdag, the Company’s President, Chief Executive Officer, and Director, and entered into Amendment

No.

5

to the Executive Employment Agreement with Mr. Akdag. The Agreement amended certain provisions of the Executive Employment Agreement as follows: the term of the Agreement was for

three

years, commencing on

March 16, 2016;

Mr. Akdag’s salary was increased to

$600,000

per year throughout the term of the Agreement, and Mr. Akdag was granted

120,000

shares of restricted stock. The restricted stock was granted on

March 16, 2016,

in accordance with the Company’s

2006

Employee Equity CompensationRestricted Stock Plan and the restrictions lapse ratably over a

three

-year period.

Operating Leases

Prior to its move to Delray Beach, FL, the Company leased its

65,300

square foot executive offices, warehouse facility, and customer service and pharmacy contact centers under a non-cancelable operating lease in Pompano Beach, Florida. The Company was responsible for certain maintenance costs, taxes, and insurance under this lease. Rent expense was

$519,000

and

$781,000

for the fiscal years ended

March 31, 2017

and

2016,

respectively. The Company relocated to the Delray Beach property in the quarter ended

December 31, 2016,

therefore eliminating any future rent payments subsequent to

December 1, 2016.

Upon acquisition of the Delray Beach property in

January 2016,

48%

of the property, approximately

88,000

square feet of the property was leased to

two

tenants. At

March 31, 2018,

the leases with these

two

tenants had a remaining weighted average lease term of

2.0

years. The Company recorded approximately

$604,000

and

$586,000

in rental revenue in fiscal

2018

and

2017,

respectively, which was included in other income. The Company expects to receive the following future lease payments over the next

three

years:

$622,000

in fiscal

2019;

$484,000

in fiscal

2020;

and

$97,000

in fiscal

2021.