10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

       For the fiscal year ended March 31, 2019

OR

  ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 000-28827

_______________________________________________

PETMED EXPRESS, INC.

(Exact name of registrant as specified in its charter)

FLORIDA	65-0680967
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)
420 South Congress Avenue, Delray Beach, Florida 33445
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (561) 526-4444
Securities registered under Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
COMMON STOCK,	PETS	The NASDAQ Stock Market LLC
$.001 PAR VALUE		(NASDAQ Global Select Market)
Securities registered under Section 12(g) of the Act:
NONE

___________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “accelerated filer”, “large accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant as of September 30, 2018, the last business day of the registrant’s most recently completed second fiscal quarter, was $656.0 million based on the closing sales price of the registrant’s Common Stock on that date, as reported on the NASDAQ Global Select Market.

The number of shares of the registrant’s Common Stock outstanding as of May 28, 2019 was 20,223,354.

DOCUMENTS INCORPORATED BY REFERENCE

Information to be set forth in our Proxy Statement relating to our 2019 Annual Meeting of Stockholders to be held on July 26, 2019 is incorporated by reference in Items 10, 11, 12, 13, and 14 of Part III of this report.

PETMED EXPRESS, INC.

2019 Annual Report on Form 10-K

TABLE OF CONTENTS

		Page
PART I		1
Item 1.	Business	1
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	11
Item 2.	Properties	11
Item 3.	Legal Proceedings	11
Item 4.	Mine Safety Disclosures	11
PART II		12
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 8.	Financial Statements and Supplementary Data	24
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	44
Item 9A.	Controls and Procedures	44
Item 9B.	Other Information	44
PART III		45
Item 10.	Directors, Executive Officers, and Corporate Governance	45
Item 11.	Executive Compensation	45
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	45
Item 13.	Certain Relationships and Related Transactions, and Director Independence	45
Item 14.	Principal Accountant Fees and Services	45
PART IV		46
Item 15.	Exhibits, Financial Statement Schedules	46
Item 16.	Form 10-K Summary	47
SIGNATURES		48

PART I

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain information in this Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the words "believes," "intends," "expects," "may," "will," "should," "plan," "projects," "contemplates," "intends," "budgets," "predicts," "estimates," "anticipates," or similar expressions. These statements are based on our beliefs, as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties, and assumptions. Actual future results may differ significantly from the results discussed in the forward-looking statements. A reader, whether investing in our common stock or not, should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report on Form 10-K. When used in this Annual Report on Form 10-K, "PetMed Express," "1-800-PetMeds," “PetMeds,” "PetMed," “PetMeds.com,” "PetMed Express.com," "the Company," "we," "our," and "us" refer to PetMed Express, Inc. and our wholly-owned subsidiaries.

ITEM 1. BUSINESS

General

PetMed Express, Inc. and subsidiaries, d/b/a 1-800-PetMeds, is a leading nationwide pet pharmacy. The Company markets prescription and non-prescription pet medications, and other health products for dogs and cats, direct to the consumer. The Company offers consumers an attractive alternative for obtaining pet medications in terms of convenience, price, and speed of delivery.

The Company markets its products through national advertising campaigns, which aim to increase the recognition of the “1-800-PetMeds” brand name, and “PetMeds” family of trademarks, increase traffic on its website at www.1800petmeds.com, acquire new customers, and maximize repeat purchases. Our fiscal year end is March 31, our executive offices are currently located at 420 South Congress Avenue, Delray Beach, Florida 33445, and our telephone number is (561) 526-4444.

Our Products

We offer a broad selection of products for dogs and cats. Our current product line contains approximately 3,000 SKUs of the most popular pet medications, health products, and supplies. These products include a majority of the well-known brands of medication. Generally, our prices are competitive with the prices for medications charged by veterinarians and retailers. We also offer for sale additional pet supplies on our website, which are drop shipped to our customers by third parties. These pet supplies include: food, beds, crates, stairs, strollers, and other popular pet supplies. We research new products, and regularly select new products or the latest generation of existing products to become part of our product selection. In addition, we also refine our current products to respond to changing consumer-purchasing habits. Our website is designed to give us the flexibility to change featured products or promotions. Our product line provides customers with a wide variety of selections across the most popular health categories for dogs and cats. Our current products include:

Non-Prescription Medications (OTC) and supplies: Flea and tick control products, bone and joint care products, vitamins, treats, nutritional supplements, hygiene products, and supplies.

Prescription Medications (Rx): Heartworm and flea and tick preventatives, arthritis, dermatitis, thyroid, diabetes, pain medications, heart/blood pressure, and other specialty medications, as well as generic substitutes.

Sales

We offer our products through three main sales channels: Internet through our website, telephone contact center through our toll-free number, and direct mail/print through brochures and postcards. We have designed our website to provide a convenient, cost-effective, and informative shopping experience that encourages consumers to purchase products important for a pet’s health and quality of life. We believe that these multiple channels allow us to increase the visibility of our brand name and provide our customers with increased shopping flexibility and excellent service.

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Internet

We seek to combine our product selection and pet health information with the shopping ease of the Internet to deliver a convenient and personalized shopping experience. Our website offers health and nutritional product selections for dogs and cats, and relevant editorial and easily obtainable or retrievable resource information. Customers can search our website for products and access resources on a variety of information on dogs and cats. Customers can shop at our website by category, product line, individual product, or symptom. We attracted approximately 30 million visitors to our website during fiscal 2019, approximately 10% of those visitors placed an order, and our website generated approximately 85% of our total sales for the same time period. On our website pet owners have access to health information covering pets’ behavior and illnesses, and natural and pharmaceutical remedies specifically for a pet’s problem. The pet education content on our main website is periodically updated with the latest research for pet owners. As part of our multichannel strategy, we also offer mobile versions of our website (www.1800petmeds.com) and an application for mobile phones, tablets, and other devices. In February 2017, we released our mobile application, which offers customers a more streamlined shopping experience. Mobile application features include: “ask-the-vet”; live web chat; easy refill medication reminders; local veterinarian finder; and express checkout to provide our customers with fast, easy, and helpful service from their mobile devices.

Telephone Contact Center

Our customer care representatives receive and process inbound and outbound customer calls, facilitate our live web chat, and process customer e-mails. Our telephone system is equipped with certain features including pop-up screens and call blending capabilities that give us the ability to efficiently utilize our customer care representatives’ time, providing excellent customer care, service, and support. Our customer care representatives receive a base salary and are rewarded with commissions for sales, and bonuses and other awards for achieving certain quality goals.

Direct Mail/Print

We mail brochures and postcards in response to requests generated from our advertising and as part of direct mail campaigns to our customers.

Our Customers

Approximately 2.3 million customers have purchased from us within the last two years. We attracted approximately 467,000 and 521,000 new customers in fiscal 2019 and 2018, respectively. Our customers are located throughout the United States, with approximately 50% of customers residing in California, Florida, Texas, New York, Pennsylvania, North Carolina, Georgia, and Virginia. Our primary focus has been on retail customers and the average purchase was approximately $87 for both fiscal 2019 and fiscal 2018.

Marketing

The goal of our marketing strategy is to build brand recognition, increase customer traffic, add new customers, build strong customer loyalty, maximize reorders, and develop incremental revenue opportunities. We have an integrated marketing campaign that includes online marketing, television advertising, and direct mail/print and e-mail.

Online Marketing

We advertise and market our products primarily online. We make our brand available to Internet consumers by purchasing targeted keywords and achieving prominent placement on the top search engines and search engine networks, including Google, Bing™, and Yahoo®. We utilize Internet display and video advertisements, social media, and comparison shopping, and we are also members of the Rakuten Network, previously known as the Linkshare Network, which is an affiliate program with merchant clients and affiliate websites.

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Television Advertising

Our television advertising is designed to build brand equity, create brand awareness, and generate initial purchases of products via the telephone and the Internet. Our television commercials typically focus on our ability to rapidly deliver to customers the same medications offered by veterinarians, but at reduced prices. We generally purchase advertising on national cable channels to target our key demographic group – women, ages 30 to 65. We believe that television advertising is particularly effective and instrumental in building brand awareness. Our most current television commercial, airing nationally, speaks to pet owners about the savings and convenience of purchasing the same exact pet medications from 1-800-PetMeds.

Direct Mail/Print and E-mail

We use direct mail/print and e-mail to acquire new customers and to remind our existing customers to reorder.

Operations

Order Processing

Our website allows customers to easily browse and purchase all of our products online. Our website is designed to be fast, secure, and easy to use with order and shipping confirmations, and with online order tracking capabilities. We provide our customers with toll-free telephone access to our customer care representatives. Our call center generally operates from 7:00 AM to 11:00 PM, Monday through Thursday, 7:00 AM to 9:00 PM on Friday, 9:00 AM to 6:00 PM on Saturday, and 9:00 AM to 5:00 PM on Sunday, Eastern Time. The process of customers purchasing products from 1-800-PetMeds consists of a few simple steps. A customer first places an order online or by calling our toll-free telephone number. The following information is needed to process prescription orders: pet information, prescription information, and the veterinarian’s name and phone number. This information is entered into our computer system. Then our pharmacists and pharmacy technicians verify all prescriptions. The order process system checks for the verification for prescription medication orders and a valid payment method for all orders. Verified orders are then sent to our fulfillment center, where items are picked, and then shipped via United States Postal Service and Federal Express. Our customers enjoy the convenience of rapid home delivery, with the majority of all orders being shipped within 24 hours of ordering.

Customer Care and Support

We believe that a high level of customer care and support is critical in retaining and expanding our customer base. Customer care representatives participate in ongoing training programs under the supervision of our training managers. These training sessions include a variety of topics such as product knowledge, computer usage, customer service tips, and the relationship between our Company and veterinarians. Our customer care representatives respond to customers’ e-mails, calls, and live web chats that are related to products, order status, prices, and shipping. We believe our customer care representatives are a valuable source of feedback regarding customer satisfaction.

Warehousing and Shipping

We inventory our products and fill most customer orders from our corporate headquarters in Delray Beach, Florida. We have an in-house fulfillment and distribution operation, which is used to manage the entire supply chain, beginning with the placement of the order, continuing through order processing, and then fulfilling and shipping of the product to the customer. We offer a variety of shipping options, including next day delivery. We ship to anywhere in the United States served by the United States Postal Service or Federal Express. Priority orders are expedited in our fulfillment process. Our goal is to ship the products the same day that the order is received. For prescription medications, our goal is to ship the product immediately after the prescription has been authorized by the customer’s veterinarian.

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Purchasing

We purchase our products from a variety of sources, including certain manufacturers, domestic distributors, and wholesalers. There were four suppliers from whom we purchased approximately 50% of all products in fiscal 2019. We believe having strong relationships with product manufacturers and distributors will ensure the availability of an adequate volume of products ordered by our customers. Some of the major manufacturers of prescription and non-prescription medications have declined to sell these products to direct marketing companies, such as our company. (See Risk Factors.) Part of our growth strategy includes developing direct relationships with all of the leading pharmaceutical manufacturers of the more popular prescription and non-prescription medications.

Technology

We utilize integrated technologies in our call centers, e-commerce, order entry, and inventory control/fulfillment operations. Our systems are custom configured by us to optimize our computer telephone integration and mail-order processing. The systems are designed to maintain a large database of specialized information and process a large volume of orders efficiently and effectively. Our systems provide our customer care representatives, and our customers on our website, including on our mobile application, with real time product availability information and updated customer information to enhance our customer care.

We also have an integrated direct connection for processing credit cards to ensure that a valid credit card number and authorization have been received at the same time our customer care representatives are on the telephone with the customer or when a customer submits an order on our website. Our information systems provide our customer care representatives with records of all prior contact with a customer, including the customer’s address, telephone number, e-mail address, prescription information, order history, payment history, and notes.

Competition

The pet medications market is competitive and highly fragmented. Our competitors consist of veterinarians, and online and traditional retailers. We believe that the following are the principal competitive factors in our market:

● Product selection and availability, including the availability of prescription and non-prescription medications;

● Brand recognition;

● Reliability and speed of delivery;

● Personalized service and convenience;

● Price; and

● Website usability and content.

We compete with veterinarians, and online and traditional retailers for the sale of prescription and non-prescription pet medications and other health products. Many pet owners may prefer the convenience of purchasing their pet medications or other health products at the time of a veterinarian visit. In order to effectively compete with veterinarians, we must continue to educate pet owners about the service, convenience, and savings offered by our Company.

According to the American Pet Products Manufacturers Association, pet spending in the United States increased 4.4% to $72.6 billion in 2018. Pet supplies and medications represented $18.1 billion, or 25% of the total spending on pets in the United States. The pet medication market that we participate in is estimated to be approximately $5.0 billion, with veterinarians having the majority of the market share. The dog and cat population is approximately 184 million, with approximately 68% of all households having a pet.

We believe that the following are the main competitive strengths that differentiate 1-800-PetMeds from the competition:

● Channel leader, in an estimated $5.0 billion industry;

● “1-800-PetMeds” brand name;

● Licensed pharmacy to conduct business in 50 states, and a Pharmacy Verified website (a website verification program by the National Association of Boards of Pharmacy®, which identifies online pharmacies and pharmacy-related websites as safe and legitimate);

● Exceptional customer care and support.

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Intellectual Property

We conduct our business under the trade name “1-800-PetMeds” and use a family of trade names all containing the term “PetMeds” or “PetMed” in some form. We believe the “1-800-PetMeds” trade name, which is also our toll-free telephone number, and the “PetMeds” family of trademarks, have added significant value and are important factors in the marketing of our products. We have also obtained the right to use and control the Internet addresses www.1800petmeds.com, www.1888petmeds.com, www.petmedexpress.com, www.petmed.com, and www.petmeds.com.

We also obtained the right to use and control the Internet addresses www.petmeds.pharmacy, www.petmed.pharmacy, and www.1800petmeds.pharmacy, through a National Association of Boards of Pharmacy® initiative to ensure high standards for online pharmacies. We do not expect to lose the ability to use the Internet addresses; however, there can be no assurance in this regard and the loss of these addresses may have a material adverse effect on our financial position and results of operations. We are the exclusive owners of United States Trademark Registrations for “PetMed Express and Design®,” “1888PetMeds and Design®,” “1-800-PetMeds and Design®,” 1-800-PetMeds®,” and “PetMeds®,” among numerous others.

Government Regulation

Dispensing prescription medications is governed at the state level by Boards of Pharmacy, or similar regulatory agencies, of each state where prescription medications are dispensed. We are subject to regulation by the State of Florida and are licensed as a community pharmacy by the Florida Board of Pharmacy. Our current license is valid until February 28, 2021, and prior to that date a renewal application will be submitted to the Board of Pharmacy. During fiscal 2015 we obtained a federal registration, and state registrations/permits as required, to dispense Schedule IV controlled substances. We also updated our federal registration and state registrations/permits as required to include the ability to dispense Schedule V controlled substances. Our pharmacy practice is also licensed and/or regulated by 49 other state pharmacy boards, the District of Columbia Board of Pharmacy, and the United States Drug Enforcement Administration, and with respect to our products, by other regulatory authorities including, but not necessarily limited to, the United States Food and Drug Administration (“FDA”) and the United States Environmental Protection Agency. As a licensed pharmacy in the State of Florida, we are subject to the Florida Pharmacy Act and regulations promulgated thereunder. To the extent that we are unable to maintain our license as a community pharmacy with the Florida Board of Pharmacy, or if we do not maintain the licenses granted by other state pharmacy boards, or if we become subject to actions by the FDA, or other enforcement regulators, our distribution of prescription medications to pet owners could cease, which could have a material adverse effect on our financial condition and results of operations.

Employees

We currently have 199 full time employees, including: 107 in customer care and marketing; 29 in fulfillment and purchasing; 52 in our pharmacy; 3 in information technology; 3 in administrative positions; and 5 in management. None of our employees are represented by a labor union, or governed by any collective bargaining agreements. We consider relations with our employees to be satisfactory.

Available Information

We file annual, quarterly, and current reports, proxy statements, and other information with the Securities and Exchange Commission ("SEC"). Our SEC filings, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to the Exchange Act are available free of charge over the Internet on our website at www.1800petmeds.com or at the SEC's web site at www.sec.gov. Our SEC filings will be available through our website as soon as reasonably practicable after we have electronically filed or furnished them to the SEC. Information contained on our website is not incorporated by reference into this Annual Report on Form 10-K.

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ITEM 1A. RISK FACTORS

You should carefully consider the risks and uncertainties described below, and all the other information included in this Annual Report on Form 10-K before you decide to invest in our common stock. Any of the following risks could materially adversely affect our business, financial condition, or operating results and could result in a loss of your investment.

We may inadvertently fail to comply with various state or federal regulations covering the dispensing of prescription pet medications which may subject us to reprimands, sanctions, probations, fines, suspensions, or the loss of one or more of our pharmacy licenses.

The sale and delivery of prescription pet medications is generally governed by state laws and state regulations, and with respect to controlled substances, also by federal law. Since our pharmacy is located in the State of Florida, the Company is governed by the laws and regulations of the State of Florida. Each prescription pet medication sale we make is likely also to be covered by the laws of the state where the customer is located. The laws and regulations relating to the sale and delivery of prescription pet medications vary from state to state, but generally require that prescription pet medications be dispensed with the authorization from a prescribing veterinarian. To the extent that we are unable to maintain our license as a community pharmacy with the Florida Board of Pharmacy, or if we do not maintain the licenses granted by other state boards, or if we become subject to actions by the FDA, or other enforcement regulators, our dispensing of prescription medications to pet owners could cease, which could have a material adverse effect on our operations.

The Company is a party to routine litigation and administrative complaints incidental to its business. Management does not believe that the resolution of any or all of such routine litigation and administrative complaints is likely to have a material adverse effect on the Company’s financial condition or results of operations. While we make every effort to fully comply with all applicable state rules, laws, and regulations, from time to time we have been the subject of administrative complaints regarding the authorization of prescriptions prior to shipment. We cannot assure you that we will not be the subject of administrative complaints in the future. We cannot guarantee you that we will not be subject to reprimands, sanctions, probations, or fines, or that one or more of our pharmacy licenses will not be suspended or revoked. If we were unable to maintain our license as a community pharmacy in the State of Florida, or if we are not granted licensure in a state that begins to require licensure, or if one or more of the licenses granted by other state boards should be suspended or revoked, our ability to continue to sell prescription medications and to continue our business as it is presently conducted could be in jeopardy.

We currently purchase a portion of our prescription and non-prescription medications from third party distributors and we are not an authorized distributor of these products. We do not have any guaranteed supply of medications at any pre-established prices.

The majority of our sales were attributable to sales of prescription and non-prescription medications. Some of the major pharmaceutical manufacturers have declined to sell prescription and non-prescription pet medications directly to us. In order to assure a supply of these products, we purchase medications from various secondary sources, including a variety of domestic distributors. Our business strategy includes seeking to establish direct purchasing arrangements with major pet pharmaceutical manufacturing companies. If we are not successful in achieving this goal, we will continue to rely upon secondary sources. We cannot guarantee that if we continue to purchase prescription and non-prescription pet medications from secondary sources that we will be able to purchase an adequate supply to meet our customers’ demands, or that we will be able to purchase these products at competitive prices. As these products represent a significant portion of our sales, our failure to fill customer orders for these products could adversely impact our sales. If we are forced to pay higher prices for these products to ensure an adequate supply, we cannot guarantee that we will be able to pass along to our customers any increases in the prices we pay for these medications. This inability to pass along increased prices could materially adversely affect our gross margins, financial condition and results of operations.

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Our failure to properly manage our inventory may result in excessive inventory carrying costs, or inadequate supply of products, which could materially adversely affect our financial condition and results of operations.

Our current product line contains approximately 3,000 SKUs. A significant portion of our sales is attributable to products representing approximately 100 SKUs, including the most popular flea and tick, and heartworm preventative brands. We need to properly manage our inventory to provide an adequate supply of these products and avoid excessive inventory of the products representing the balance of the SKUs. We generally place orders for products with our suppliers based upon our internal estimates of the amounts of inventory we will need to fill future orders. These estimates may be significantly different from the actual orders we receive.

In the event that subsequent orders fall short of original estimates, we may be left with excess inventory. Significant excess inventory could result in price discounts and increased inventory carrying costs. Similarly, if we fail to have an adequate supply of some SKUs, we may lose sales opportunities. We cannot guarantee that we will maintain appropriate inventory levels. Any failure on our part to maintain appropriate inventory levels may have a material adverse effect on our financial condition and results of operations.

Resistance from veterinarians to authorize prescriptions, or attempts/efforts on their part to discourage pet owners from purchasing from internet mail-order pharmacies could cause our sales to decrease and could materially adversely affect our financial condition and results of operations.

Since we began our operations some veterinarians have resisted providing our customers with a copy of their pet’s prescription or authorizing the prescription to our pharmacy staff, thereby effectively preventing us from filling such prescriptions under state law. We have also been informed by customers and consumers that veterinarians have tried to discourage pet owners from purchasing from internet mail-order pharmacies. Although veterinarians in some states are required by law to provide a pet owner with a prescription if medically appropriate, if the number of veterinarians who refuse to authorize prescriptions should increase, or if veterinarians are successful in discouraging pet owners from purchasing from internet mail-order pharmacies, our sales could decrease and our financial condition and results of operations may be materially adversely affected.

Significant portions of our sales are made to residents of eight states. If we should lose our pharmacy license in one or more of these states, our financial condition and results of operations would be materially adversely affected.

While we ship pet medications to customers in all 50 states, approximately 50% of our sales for the fiscal year ended March 31, 2019 were made to customers located in the states of California, Florida, Texas, New York, Pennsylvania, North Carolina, Georgia, and Virginia. If for any reason our license to operate a pharmacy in one or more of those states should be suspended or revoked, or if it is not renewed, our ability to sell prescription medications to residents of those states would cease and our financial condition and results of operations in future periods would be materially adversely affected.

We face significant competition from veterinarians and online and traditional retailers and may not be able to compete profitably with them.

We compete directly and indirectly with veterinarians for the sale of pet medications and other health products. Veterinarians hold a competitive advantage over us because many pet owners may find it more convenient or preferable to purchase these products directly from their veterinarians at the time of an office visit. We also compete directly and indirectly with both online and traditional retailers. Both online and traditional retailers may hold a competitive advantage over us because of longer operating histories, established brand names, greater resources, and/or an established customer base. Online retailers may have a competitive advantage over us because of established affiliate relationships to drive traffic to their website. Traditional retailers may hold a competitive advantage over us because pet owners may prefer to purchase these products from a store instead of online or through catalog or telephone methods. In addition, we face growing competition from online and multichannel retailers, some of whom may have a lower cost structure than ours, as customers now routinely use computers, tablets, smartphones, and other mobile devices and mobile applications to shop online and compare prices and products in real time. In order to effectively compete in the future, we may be required to offer promotions and other incentives, which may result in lower operating margins and adversely affect the results of operations. We also face a significant challenge from our competitors forming alliances with each other, such as those between online and traditional retailers. These relationships may enable both their online and retail stores to negotiate better pricing and better terms from suppliers by aggregating the demand for products and negotiating volume discounts, which could be a competitive disadvantage to us.

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The content of our website could expose us to various kinds of liability, which, if prosecuted successfully, could negatively impact our business.

Because we post product and pet health information and other content on our website, we face potential liability for negligence, copyright infringement, patent infringement, trademark infringement, defamation, and/or other claims based on the nature and content of the materials we post. Various claims have been brought, and sometimes successfully prosecuted, against Internet content distributors. We could be exposed to liability with respect to the unauthorized duplication of content or unauthorized use of other parties’ proprietary technology. Although we maintain general liability insurance, our insurance may not cover potential claims of this type, or may not be adequate to indemnify us for all liability that may be imposed. Any imposition of liability that is not covered by insurance, or is in excess of insurance coverage, could materially adversely affect our financial condition and results of operations.

We may not be able to protect our intellectual property rights, and/or we may be found to infringe on the proprietary rights of others.

We rely on a combination of trademarks, trade secrets, copyright laws, and contractual restrictions to protect our intellectual property rights. These afford only limited protection. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy our non-prescription private label or generic equivalents, when and if developed, as well as aspects of our sales formats, or to obtain and use information that we regard as proprietary, including the technology used to operate our website and our content, and our trademarks. Litigation or proceedings before the United States Patent and Trademark Office or other bodies may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets and domain names, or to determine the validity and scope of the proprietary rights of others. Any litigation or adverse proceeding could result in substantial costs and diversion of resources, and could seriously harm our business and operating results. Third parties may also claim infringement by us with respect to past, current, or future technologies. We expect that participants in our market will be increasingly involved in infringement claims as the number of services and competitors in our industry segment grows. Any claim, whether meritorious or not, could be time-consuming, result in costly litigation, cause service upgrade delays, or require us to enter into royalty or licensing agreements. These royalty or licensing agreements might not be available on terms acceptable to us or at all.

If we are unable to protect our Internet addresses or to prevent others from using Internet addresses that are confusingly similar, our business may be adversely impacted.

Our Internet addresses, www.1800petmeds.com, www.1888petmeds.com, www.petmedexpress.com, www.petmed.com, www.petmeds.com, www.petmeds.pharmacy, www.petmed.pharmacy, and www.1800petmeds.pharmacy, are critical to our brand recognition and our overall success. If we are unable to protect these Internet addresses, our competitors could capitalize on our brand recognition. There may be similar Internet addresses used by competitors. Governmental agencies and their designees generally regulate the acquisition and maintenance of Internet addresses. The regulation of Internet addresses in the United States and in foreign countries has changed, and may undergo further change in the near future. Furthermore, the relationship between regulations governing Internet addresses and laws protecting trademarks and similar proprietary rights is unclear. Therefore, we may not be able to protect our own Internet addresses, or prevent third parties from acquiring Internet addresses that are confusingly similar to, infringe upon, or otherwise decrease the value of our Internet addresses.

Since all of our operations are housed in a single location, we are more susceptible to business interruption in the event of damage to, or disruptions in, our facility.

Our headquarters and distribution center are currently located in one location in South Florida, and most of our shipments of products to our customers are made from this sole distribution center. We have no present plans to establish any additional distribution centers or offices. Because we consolidate our operations in one location, we are more susceptible to power and equipment failures, and business interruptions in the event of fires, floods, and other natural disasters than if we had additional locations. Furthermore, because we are located in South Florida, which is a hurricane-sensitive area, we are particularly susceptible to the risk of damage to, or total destruction of, our headquarters and distribution center and surrounding transportation infrastructure caused by a hurricane.

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We cannot assure you that we are adequately insured to cover the amount of any losses relating to any of these potential events, business interruptions resulting from damage to or destruction of our headquarters and distribution center, or power and equipment failures relating to our call center or websites, or interruptions or disruptions to major transportation infrastructure, or other events that do not occur on our premises. The occurrence of one or more of these events could adversely impact our ability to generate revenues in future periods.

A failure of our information systems and customer-facing technology systems or any security breach or unauthorized disclosure of confidential information, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation and have a material adverse effect on our business.

Our business is dependent upon the efficient operation of our information systems. In particular, we rely on our information systems to effectively manage our business model strategy, with tools to track and manage sales, inventory, marketing, customer service efforts, the preparation of our consolidated financial and operating data, credit card information, and customer information. The failure of our information systems to perform as designed or the failure to maintain and enhance or protect the integrity of these systems could disrupt our business operations, adversely impact sales and the results of operations, expose us to customer or third-party claims, or result in adverse publicity.

Through our information technology, we are able to provide an improved overall shopping and interconnected retail experience that empowers our customers to shop and interact with us from computers, tablets, smartphones and other mobile devices. We use our website and our mobile application both as sales channels for our products and also as methods of providing product and other relevant information to our customers to drive online sales. Our online programs, communities and knowledge center allow us to inform, assist and interact with our customers. We also continually seek to enhance all of our online properties to provide an attractive user-friendly interface for our customers, as evidenced by our recent redesign of our website. Disruptions, failures or other performance issues with these customer-facing technology systems could impair the benefits that they provide to our online business and negatively affect our relationship with our customers.

Additionally, we collect, process, and retain sensitive and confidential customer information in the normal course of our business. Despite the security measures we have in place and any additional measures we may implement in the future, our facilities and systems, and those of our third-party service providers, could be vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors, human errors, acts of vandalism, or other events. Any security breach or event resulting in the misappropriation, loss, or other unauthorized disclosure of confidential information, whether by us directly or our third-party service providers, could damage our reputation, expose us to the risks of litigation and liability, disrupt our business, or otherwise affect our results of operations.

Our operating results are difficult to predict and may fluctuate, and a portion of our sales are seasonal.

Factors that may cause our operating results to fluctuate include:

● Our ability to obtain new customers at a reasonable cost, retain existing customers, or encourage reorders;

● Our ability to increase the number of visitors to our website, or our ability to convert visitors to our website into customers;

● The mix of medications and other pet products sold by us;

● Our ability to manage inventory levels or obtain an adequate supply of products;

● Our ability to adequately maintain, upgrade, and develop our website, the systems that we use to process customers’ orders and payments, or our computer network;

● Increased competition within our market niche;

● Price competition;

● New products introduced to the market, including generics;

● Increases in the cost of advertising;

● The amount and timing of operating costs and capital expenditures relating to expansion of our product line or operations;

● Disruption of our toll-free telephone service, technical difficulties, or systems and Internet outages or slowdowns; and

● Unfavorable general economic trends.

9

Because our operating results are difficult to predict, we believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance. The majority of our product sales are affected by the seasons, due to the seasonality of mainly flea, tick, and heartworm medications. For the quarters ended June 30, 2018, September 30, 2018, December 31, 2018, and March 31, 2019, Company sales were 31%, 25%, 21%, and 23%, respectively. In addition to the seasonality of our sales, our annual and quarterly operating results have fluctuated in the past and may fluctuate significantly in the future due to a variety of factors, including weather, many of which are out of our control. Any change in one or more of these factors could materially adversely affect our financial condition and results of operations in future periods.

We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and potentially disrupt our business.

We accept payments using a variety of methods, including credit and debit cards, PayPal, and checks, and we may offer new payment options over time. Acceptance of these payment options subjects us to rules, regulations, contractual obligations and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules governing electronic funds transfers. These requirements may change over time or be reinterpreted, making compliance more difficult or costly. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs. We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, and other forms of electronic payment. If these companies become unable to provide these services to us, or if their systems are compromised, it could potentially disrupt our business. The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment systems. If we fail to comply with applicable rules or requirements for the payment methods we accept, or if payment-related data is compromised due to a breach or misuse of data, we may be liable for costs incurred by payment card issuing banks and other third parties or subject to fines and higher transaction fees, or our ability to accept or facilitate certain types of payments may be impaired. As a result, our business and operating results could be adversely affected.

Our stock price fluctuates from time to time and may fall below expectations of securities analysts and investors, and could subject us to litigation, which may result in you suffering a loss on your investment.

The market price of our common stock may fluctuate significantly in response to a number of factors, many of which are out of our control. These factors include: quarterly variations in operating results; changes in accounting treatments or principles; announcements by us or our competitors of new products and services offerings; significant contracts, acquisitions, or strategic relationships; additions or departures of key personnel; any future sales of our common stock or other securities; stock market price and volume fluctuations of publicly-traded companies; and general political, economic, and market conditions. In some future quarter our operating results may fall below the expectations of securities analysts and investors, which could result in a decrease in the trading price of our common stock. In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities. We may be the target of similar litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources, which could seriously harm our business and operating results.

We may issue additional shares of preferred stock that could defer a change of control or dilute the interests of our common stockholders. Our charter documents could defer a takeover effort which could inhibit your ability to receive an acquisition premium for your shares.

Our charter permits our Board of Directors to issue up to 5.0 million shares of preferred stock without stockholder approval. Currently there are 2,500 shares of our Convertible Preferred Stock issued and outstanding. This leaves slightly less than 5.0 million shares of preferred stock available for issuance at the discretion of our Board of Directors. These shares, if issued, could contain dividend, liquidation, conversion, voting, or other rights which could adversely affect the rights of our common stockholders and which could also be utilized, under some circumstances, as a method of discouraging, delaying, or preventing a change in control. Provisions of our articles of incorporation, bylaws and Florida law could make it more difficult for a third party to acquire us, even if many of our stockholders believe it is in their best interest.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTIES

Our facilities, including our principal executive offices and distribution center, are located at 420 South Congress Avenue, Delray Beach, Florida 33445. In January 2016, we completed the acquisition of this real property located at 420 South Congress Avenue, Delray Beach, Florida 33445, and improvements thereon (collectively referred to herein as the “Property”), the assignment and assumption of all leases and service agreements affecting the Property, and certain tangible and intangible personal property related to the Property, for a purchase price of $18.5 million, plus closing costs. The Property consists of approximately 634,000 square feet of land or 14.6 acres with two building complexes totaling approximately 185,000 square feet, with additional land for future use. The first building complex consists of approximately 125,000 square feet and the second building complex consists of approximately 60,000 square feet each consisting of both office and warehouse space. The Company occupies approximately 97,000 square feet of the first building for its principal offices and distribution center. As of March 31, 2019, 48% of the Property was leased to two tenants with a remaining weighted average lease term of 4.5 years. We believe that our facilities are sufficient for our current needs and are in good condition in all material respects.

ITEM 3. LEGAL PROCEEDINGS

The Company is a defendant in a putative class action lawsuit, filed in May 2019, in the United States District Court for the Southern District of New York seeking injunctive and monetary relief styled Valentin Reid, on behalf of himself and all others similarly situated v. PetMed Express, Inc., Case No. 19-cv-4169, alleging that the Company’s website, www.1800petmeds.com, does not comply with the Americans with Disabilities Act (“ADA”), New York State Human Rights Law (“NYSHRL”), and New York City Human Rights Law (“NYCHRL”), and discriminates against visually impaired individuals. The Company denies any wrongdoing and intends to vigorously defend itself against such allegations. At this stage, the company can neither accurately predict the likelihood of an unfavorable or adverse outcome nor provide an estimate of the amount or range of potential loss, if any.

In January 2019, a putative class action complaint was filed by a different individual in the United States District Court for the Southern District of New York alleging that company’s website, www.1800petmeds.com, does not comply with the ADA, NYSHRL, and NYCHRL, and discriminates against visually impaired individuals. The Plaintiff named a New York corporation named Pet Meds Inc., which is not related or affiliated with the Company, as the defendant. However, the Plaintiff has sought to remedy that error by requesting leave to file an amended complaint naming the Company, which request the Court granted on April 9, 2019. On April 18, 2019, the Court granted the Plaintiff’s request to transfer the case to the United States District Court for the Eastern District of New York, where it is currently pending. The matter is styled Brian Fischler, individually and on behalf of all other persons similarly situated v. PetMed Express, Inc.; Case No. 19-cv-02391. The Company denies any wrongdoing and it intends to vigorously defend itself against such allegations. At this early juncture, the Company can neither accurately predict the likelihood of an unfavorable or adverse outcome nor provide an estimate of the amount or range of potential loss, if any.

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.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable. 

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Stock

      Our common stock is traded on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “PETS.” The prices set forth below reflect the high and low sale prices per share in each of the quarters of fiscal 2019 and 2018 as reported by the NASDAQ.

Fiscal 2019:	High		Low
First Quarter	$	46.17	$	33.46
Second Quarter	$	44.57	$	33.01
Third Quarter	$	32.67	$	22.42
Fourth Quarter	$	24.32	$	20.50

Fiscal 2018:	High		Low
First Quarter	$	41.06	$	20.20
Second Quarter	$	50.54	$	33.15
Third Quarter	$	48.11	$	34.19
Fourth Quarter	$	53.24	$	41.20

Holders

There were 95 holders of record of our common stock at May 28, 2019, and approximately 31,500 of our holders are “street name” or beneficial holders, whose shares are held by banks, brokers, or other financial institutions.

Dividends

During fiscal 2018 and 2019, our Board of Directors declared the following dividends:

Declaration Date	Per Share Dividend		Record Date	Total Amount (In thousands)		Payment Date
May 8, 2017	$	0.20	May 19, 2017	$	4,105	May 26, 2017
July 24, 2017	$	0.20	August 7, 2017	$	4,121	August 18, 2017
October 23, 2017	$	0.20	November 6, 2017	$	4,121	November 17, 2017
January 22, 2018	$	0.25	February 5, 2018	$	5,150	February 16, 2018
May 7, 2018	$	0.25	May 18, 2018	$	5,150	May 25, 2018
July 23, 2018	$	0.27	August 3, 2018	$	5,584	August 10, 2018
October 22, 2018	$	0.27	November 5, 2018	$	5,582	November 16, 2018
January 21, 2019	$	0.27	February 4, 2019	$	5,582	February 15, 2019

On May 8, 2017, the Company’s Board of Directors declared an increased quarterly dividend of $0.20 per share, and then on January 22, 2018 the Company’s Board of Directors increased the quarterly dividend to $0.25 per share, on its common stock. On May 7, 2018, the Company’s Board of Directors declared a quarterly dividend of $0.25 per share, and then on July 23, 2018 the Company’s Board of Directors increased the quarterly dividend to $0.27 per share, on its common stock. On May 6, 2019, the Company’s Board of Directors declared a quarterly dividend of $0.27 per share on its common stock. The $5.6 million dividend was paid on May 24, 2019, to shareholders of record at the close of business on May 17, 2019. The Company intends to continue to pay regular quarterly dividends; however the declaration and payment of future dividends is discretionary and will be subject to a determination by the Board of Directors each quarter following its review of the Company’s financial performance.

Issuer Purchases of Equity Securities

On November 8, 2006, the Company's Board of Directors approved a share repurchase plan of up to $20.0 million. On October 31, 2008, November 1, 2010, and August 1, 2011, the Company’s Board of Directors approved an increase under the share repurchase plan, each for an additional $20.0 million. The repurchase plan is intended to be implemented through purchases made from time to time in either the open market or through private transactions at the Company's discretion, subject to market conditions and other factors, in accordance with Securities and Exchange Commission requirements.

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There can be no assurances as to the precise number of shares that will be repurchased under the share repurchase plan, and the Company may discontinue the share repurchase plan at any time subject to compliance with applicable regulatory requirements. Shares purchased pursuant to the share repurchase plan will either be cancelled or held in the Company's treasury. On January 25, 2019 the Company’s Board of Directors authorized an additional $30.0 million under the repurchase plan. As of March 31, 2019, the Company had approximately $40.2 million remaining under the Company’s share repurchase plan. Since the inception of the share repurchase plan up to March 31, 2019, approximately 5.6 million shares have been repurchased under the plan for approximately $69.8 million, averaging approximately $12.54 per share. Subsequent to March 31, 2019, the Company repurchased approximately 450,000 of its own shares for approximately $8.6 million, averaging approximately $19.08 per share.

Performance Graph

Set forth below is a line graph comparing the five year cumulative performance of our Common Stock with the Nasdaq Composite, the Russell 2000, and our SIC Code 5912 (pharmacy peer group) from March 31, 2014 to March 31, 2019. The graph assumes that $100 was invested on March 31, 2014 in each of our Common Stock, the Nasdaq Composite, the Russell 2000, and the SIC Code 5912 (pharmacy peer group). Because we have historically paid dividends on a quarterly basis, the graph assumes that dividends were reinvested. The performance graph and related information below shall not be deemed “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing.

Performance graph data:

	Fiscal Year Ended March 31,
	2014		2015		2016		2017		2018		2019
PetMed Express, Inc.		100.00		129.40		146.50		171.13		362.37		204.82
Nasdaq Composite		100.00		118.12		118.77		145.94		176.24		194.97
SIC Code 5912		100.00		135.63		137.32		118.28		94.91		88.65
Russell 2000		100.00		108.21		97.65		123.25		137.78		140.61

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Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth securities authorized for issuance under equity compensation plans, including individual compensation arrangements, by us under our Amended and Restated 2006 Employee Equity Compensation Restricted Stock Plan, Amended and Restated 2006 Outside Director Equity Compensation Restricted Stock Plan, 2015 Outside Director Equity Compensation Restricted Stock Plan, and 2016 Employee Equity Compensation Restricted Stock Plan as of March 31, 2019:

EQUITY COMPENSATION PLAN INFORMATION
(In thousands)
	Number of securities				Number of securities
	to be issued upon		Weighted average		remaining available
	exercise of outstanding		exercise price of		for future issuance
	options, warrants		outstanding options,		under equity
Plan category	and rights		warrants and rights		compensation plans
2006 Employee Equity Compensation Restricted Stock Plan		13		-		-
2006 Outside Director Equity Compensation Restricted Stock Plan		-		-		-
2015 Outside Director Equity Compensation Restricted Stock Plan		68		-		468	(1)
2016 Employee Equity Compensation Restricted Stock Plan		69		-		915
Total		150				1,383

(1) The number of shares of common stock available for issuance under the 2015 Outside Director Equity Compensation Restricted Stock Plan automatically increase on the first trading day of January each calendar year during the term of the 2015 Outside Director Equity Compensation Restricted Stock Plan, by an amount equal to ten percent (10%) of the total number of shares of common stock authorized under the 2015 Outside Director Equity Compensation Restricted Stock Plan.

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ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations," the Consolidated Financial Statements and notes thereto, and other financial information included elsewhere in this Annual Report on Form 10-K. The Consolidated Statements of Income data set forth below for the fiscal years ended March 31, 2019, 2018, and 2017 and the Consolidated Balance Sheet data as of March 31, 2019 and 2018 have been derived from our audited Consolidated Financial Statements which are included elsewhere in this Annual Report on Form 10-K. The Consolidated Statements of Income data set forth below for the fiscal years ended March 31, 2016 and 2015 and the Consolidated Balance Sheet data as of March 31, 2017, 2016 and 2015 have been derived from our audited Consolidated Financial Statements which are not included in this Annual Report on Form 10-K.

CONSOLIDATED STATEMENTS OF INCOME DATA
(In thousands, except for per share amounts)
	Fiscal Year Ended March 31,
	2019		2018		2017		2016		2015
Sales	$	283,419	$	273,800	$	249,176	$	234,684	$	229,395
Cost of sales		188,105		175,993		169,862		158,388		153,125
Gross profit		95,314		97,807		79,314		76,296		76,270
Operating expenses		49,140		45,671		41,831		43,908		48,657
Net income		37,740		37,283		23,819		20,567		17,453
Net income per common share:
Basic		1.84		1.83		1.18		1.02		0.87
Diluted		1.84		1.82		1.17		1.02		0.87
Weighted average number of common shares outstanding:
Basic		20,461		20,346		20,232		20,124		20,015
Diluted		20,491		20,433		20,378		20,254		20,136
Cash dividends declared per common share		1.06		0.85		0.76		0.72		0.68

CONSOLIDATED BALANCE SHEET DATA
(In thousands)
	March 31,
	2019		2018		2017		2016		2015
Working capital	$	107,805	$	87,126	$	63,430	$	60,543	$	72,166
Total assets		154,427		134,836		112,809		90,279		82,852
Total liabilities		19,747		19,105		19,443		7,084		7,417
Shareholders' equity		134,680		115,731		93,366		83,195		75,435

NON FINANCIAL DATA (UNAUDITED)
(In thousands)
	March 31,
	2019		2018		2017		2016		2015
New customers acquired		467		521		514		489		529
Total accumulated customers (1)		10,577		10,110		9,589		9,075		8,586

(1) includes both active and inactive customers

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

PetMed Express was incorporated in the state of Florida in January 1996. The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol “PETS.” The Company began selling pet medications and other pet health products in September 1996. In March 2010 the Company started offering for sale additional pet supplies on its website, and these items are drop shipped to customers by third party vendors. Presently, the Company’s product line includes approximately 3,000 of the most popular pet medications, health products, and supplies for dogs and cats.

The Company markets its products through national advertising campaigns which aim to increase the recognition of the “1-800-PetMeds” brand name, and “PetMeds” family of trademarks, increase traffic on its website at www.1800petmeds.com, acquire new customers, and maximize repeat purchases. Approximately 85% of all sales were generated via the Internet in fiscal 2019, compared to 84% in fiscal 2018. The Company’s sales consist of products sold mainly to retail consumers. The twelve-month average purchase was approximately $87 per order for both of the fiscal years ended March 31, 2019 and 2018.

Critical Accounting Policies

Our discussion and analysis of our financial condition and the results of our operations are based upon our Consolidated Financial Statements and the data used to prepare them. The Company’s Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. On an ongoing basis we re-evaluate our judgments and estimates including those related to product returns, bad debts, inventories, and income taxes. We base our estimates and judgments on our historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. Actual results may differ from these estimates under different assumptions or conditions. Our estimates are guided by observing the following critical accounting policies.

Revenue recognition

The Company generates revenue by selling pet medication products and pet supplies. Certain pet supplies offered on the Company’s website are drop shipped to customers. The Company considers itself the principal in the arrangement because the Company controls the specified good before it is transferred to the customer. Revenue contracts contain one performance obligation, which is delivery of the product; customer care and support is deemed not to be a material right to the contract. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are estimated based on historical patterns; however this is not considered a key judgment. There are no amounts excluded from variable consideration. Revenue is recognized when control transfers to the customer at the point in time in which shipment of the product occurs. This key judgment is determined as the shipping point represents the point in time in which the Company has a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership. Outbound shipping and handling fees are an accounting policy election, and are included in sales as the Company considers itself the principal in the arrangement given responsibility for supplier selection and discretion over pricing. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales. The majority of the Company’s sales are paid by credit cards and the Company usually receives the cash settlement in two to three banking days. Credit card sales minimize accounts receivable balances relative to sales.

The Company maintains an allowance for doubtful accounts for losses that the Company estimates will arise from customers’ inability to make required payments, arising from either credit card charge-backs or insufficient funds checks. The Company determines its estimates of the uncollectibility of accounts receivable by analyzing historical bad debts and current economic trends. The allowance for doubtful accounts was approximately $39,000 at March 31, 2019 compared to $35,000 at March 31, 2018.

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Valuation of inventory

Inventories consist of prescription and non-prescription pet medications and pet supplies that are available for sale and are priced at the lower of cost or net realizable value using a weighted average cost method. The Company writes down its inventory for estimated obsolescence. The inventory reserve was approximately $54,000 and $58,000 at March 31, 2019 and 2018, respectively.

Advertising

The Company's advertising expense consists primarily of Internet marketing, direct mail/print, and television advertising. Internet costs are expensed in the month incurred and direct mail/print advertising costs are expensed when the related brochures and postcards are produced, distributed, or superseded. Television advertising costs are expensed as the advertisements are televised.

Accounting for income taxes

The Company accounts for income taxes under the provisions of ASC Topic 740, (“Accounting for Income Taxes”), which generally requires the recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that have been included in the Consolidated Financial Statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting carrying values and the tax bases of assets and liabilities, and are measured by applying enacted tax rates and laws for the taxable years in which those differences are expected to reverse.

Results of Operations

The following should be read in conjunction with the Company’s Consolidated Financial Statements and the related notes thereto included elsewhere herein. The following table sets forth, as a percentage of sales, certain operating data appearing in the Company’s Consolidated Statements of Comprehensive Income:

	Fiscal Year Ended March 31,
	2019			2018			2017
Sales		100.0	%		100.0	%		100.0	%
Cost of sales		66.4			64.3			68.2
Gross profit		33.6			35.7			31.8
Operating expenses:
General and administrative		8.7			8.9			9.2
Advertising		7.8			7.0			7.1
Depreciation		0.8			0.8			0.5
Total operating expenses		17.3			16.7			16.8
Income from operations		16.3			19.0			15.0
Total other income		1.0			0.6			0.2
Income before provision for income taxes		17.3			19.6			15.2
Provision for income taxes		4.0			6.0			5.7
Net income		13.3	%		13.6	%		9.5	%

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Fiscal 2019 Compared to Fiscal 2018

Sales

Sales increased by approximately $9.6 million, or 3.5%, to approximately $283.4 million for the fiscal year ended March 31, 2019, from approximately $273.8 million for the fiscal year ended March 31, 2018. The increase in sales for the fiscal year ended March 31, 2019 was primarily due to increased reorder sales, offset by decreased new order sales. The Company acquired approximately 467,000 new customers for the fiscal year ended March 31, 2019, compared to approximately 521,000 new customers for the same period the prior year. The following chart illustrates sales by various sales classifications:

Year Ended March 31,
Sales (In thousands)	2019		%			2018		%			$ Variance			% Variance
Reorder Sales	$	241,780		85.3	%	$	227,513		83.1	%	$	14,267			6.3	%
New Order Sales	$	41,639		14.7	%	$	46,287		16.9	%	$	(4,648	)		-10.0	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%
Internet Sales	$	240,034		84.7	%	$	230,319		84.1	%	$	9,715			4.2	%
Contact Center Sales	$	43,385		15.3	%	$	43,481		15.9	%	$	(96	)		-0.2	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%

Going forward sales may be adversely affected due to increased competition and consumers giving more consideration to price. No guarantees can be made that sales will grow in the future. The majority of our product sales are affected by the seasons, due to the seasonality of mainly flea, tick, and heartworm medications. For the quarters ended June 30, September 30, December 31, and March 31 of fiscal 2019, the Company’s sales were approximately 31%, 25%, 21%, and 23%, respectively. For the quarters ended June 30, September 30, December 31, and March 31 of fiscal 2018, the Company’s sales were approximately 29%, 24%, 22%, and 25%, respectively.

Cost of sales

Cost of sales increased by $12.1 million, or 6.9% to $188.1 million for the fiscal year ended March 31, 2019, from $176.0 million for the fiscal year ended March 31, 2018. As a percentage of sales, cost of sales was 66.4% in fiscal 2019, as compared to 64.3% in fiscal 2018. The cost of sales increase is due to increased sales and the percentage increase can be attributed to increases in discounts given to customers to stimulate sales in response to increased online competition, and an increase in product costs during the fiscal year.

Gross profit

Gross profit decreased by $2.5 million, or 2.6%, to $95.3 million for the fiscal year ended March 31, 2019, from $97.8 million for the fiscal year ended March 31, 2018. The decrease in gross profit in fiscal 2019 is directly related to increased discounts given to customers to stimulate sales. Gross profit as a percentage of sales for fiscal 2019 was 33.6% compared to 35.7% for fiscal 2018. The gross profit percentage decrease in fiscal 2019 can be mainly attributed to increases in discounts given to customers to stimulate sales in response to increased online competition, and an increase in product costs during the fiscal year. Going forward gross profit may be adversely affected due to increased competition and consumers giving more consideration to price.

General and administrative expenses

General and administrative expenses increased by $477,000, or 2.0%, to $24.8 million for the fiscal year ended March 31, 2019 from $24.3 million for the fiscal year ended March 31, 2018. The increase in general and administrative expenses for the fiscal year ended March 31, 2019 was primarily due to the following: a $291,000 increase in property expenses related to increased property taxes in fiscal 2019; a $257,000 increase in bank service fees due to increased sales; a $142,000 increase in professional fees which is related to increased legal and IT related expenses; and a $110,000 increase in travel and related expenses due to participating in a conference in fiscal 2019. Offsetting the increase was a $167,000 decrease in payroll expenses related to a decrease in stock compensation expense in fiscal 2019; a $79,000 decrease in insurance expense relating to reduced premiums; and a $78,000 net decrease to other expenses which include telephone, bad debt, and office expenses. General and administrative expenses as a percentage of sales were 8.7% for the fiscal year ended March 31, 2019, compared to 8.9% for the fiscal year ended March 31, 2018.

18

Advertising expenses

Advertising expenses increased by approximately $2.8 million to approximately $22.1 million for the fiscal year ended March 31, 2019, from approximately $19.3 million for the fiscal year ended March 31, 2018. The increase in advertising expenses for fiscal 2019 was intended to stimulate sales and promote brand awareness. The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $47 for the fiscal year ended March 31, 2019, compared to $37 for the fiscal year ended March 31, 2018.

Advertising cost of acquiring a new customer can be impacted by the advertising environment, the effectiveness of our advertising creative, increased advertising spending, and price competition. Historically, the advertising environment fluctuates due to supply and demand. A more favorable advertising environment may positively impact future new order sales, whereas a less favorable advertising environment may negatively impact future new order sales.

As a percentage of sales, advertising expense was 7.8% and 7.0% for the fiscal years ended March 31, 2019 and 2018, respectively. The increase in advertising expense as a percentage of total sales for the fiscal year ended March 31, 2018 can be mainly attributed to increased online and television advertising to stimulate sales and promote brand awareness. The Company currently anticipates advertising as a percentage of sales to be approximately 10% for fiscal 2020. However, the advertising percentage may fluctuate quarter to quarter due to seasonality and advertising availability.

Depreciation

Depreciation expense for the fiscal year ended March 31, 2019 increased by approximately $99,000, to approximately $2.2 million from approximately $2.1 million for the fiscal year ended March 31, 2018. This increase to depreciation expense for the fiscal year ended March 31, 2019 can be attributed to an increase in new property and equipment additions in fiscal 2019.

Other income

Other income increased by approximately $1.2 million, to approximately $2.9 million for the fiscal year ended March 31, 2019 from approximately $1.7 million for the fiscal year ended March 31, 2018. The increases to other income for the fiscal year ended March 31, 2018 are primarily related to increased interest income due to increased interest rates. Interest income may decrease in the future as the Company utilizes its cash balances on its share repurchase plan, with approximately $40.2 million remaining at March 31, 2019, on any quarterly dividend payment, or on its operating activities.

Provision for income taxes

For the fiscal years ended March 31, 2019 and 2018, the Company recorded an income tax provision for approximately $11.4 million and $16.5 million, respectively. The decrease to the income tax provision for fiscal 2019 is related to a decrease in operating income offset by the income tax rate reduction pursuant to the Tax Cuts and Jobs Act of 2017 (“2017 Act”). The effective tax rate for the fiscal years ended March 31, 2019 and 2018 were 23.2% and 30.7%, respectively. The decrease to the effective rate for the fiscal year ended March 31, 2019 is due to a reduction in the Company’s corporate tax rate pursuant to the 2017 Act. The Company estimates its effective tax rate will be approximately 24.0% for fiscal 2020.

Net income

Net income increased by approximately $457,000, or 1.2%, to approximately $37.7 million for the fiscal year ended March 31, 2019 from approximately $37.3 million for the fiscal year ended March 31, 2018. The increase was primarily due to a decrease in the tax provision due to a reduction in the effective tax rate, which was offset by a decrease to gross profit due to increases in discounts given to customers to stimulate sales in response to increased online competition and increased advertising.

19

Fiscal 2018 Compared to Fiscal 2017

Sales

Sales increased by approximately $24.6 million, or 9.9%, to approximately $273.8 million for the fiscal year ended March 31, 2018, from approximately $249.2 million for the fiscal year ended March 31, 2017. The increase in sales for the fiscal year ended March 31, 2018 was primarily due to increased new order and reorder sales. The Company acquired approximately 521,000 new customers for the fiscal year ended March 31, 2018, compared to approximately 514,000 new customers for the same period the prior year.

The following chart illustrates sales by various sales classifications:

Year Ended March 31,
Sales (In thousands)	2018		%			2017		%			$ Variance			% Variance
Reorder Sales	$	227,513		83.1	%	$	206,299		82.8	%	$	21,214			10.3	%
New Order Sales	$	46,287		16.9	%	$	42,877		17.2	%	$	3,410			8.0	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%
Internet Sales	$	230,319		84.1	%	$	205,643		82.5	%	$	24,676			12.0	%
Contact Center Sales	$	43,481		15.9	%	$	43,533		17.5	%	$	(52	)		-0.1	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%

Going forward sales may be adversely affected due to increased competition and consumers giving more consideration to price. No guarantees can be made that sales will continue to grow in the future. The majority of our product sales are affected by the seasons, due to the seasonality of mainly flea, tick, and heartworm medications. For the quarters ended June 30, September 30, December 31, and March 31 of fiscal 2018, the Company’s sales were approximately 29%, 24%, 22%, and 25%, respectively. For the quarters ended June 30, September 30, December 31, and March 31 of fiscal 2017, the Company’s sales were approximately 29%, 25%, 21%, and 25%, respectively.

Cost of sales

Cost of sales increased by $6.1 million, or 3.6% to $176.0 million for the fiscal year ended March 31, 2018, from $169.9 million for the fiscal year ended March 31, 2017. The increase in cost of sales in fiscal 2018 is directly related to the increase in sales during the fiscal year. As a percentage of sales, cost of sales was 64.3% in fiscal 2018, as compared to 68.2% in fiscal 2017. The cost of sales percentage decrease can be mainly attributed to a product mix shift to higher margin items, offset by additional discounts given to customers to increase sales during the fiscal year.

Gross profit

Gross profit increased by $18.5 million, or 23%, to $97.8 million for the fiscal year ended March 31, 2018, from $79.3 million for the fiscal year ended March 31, 2017. The increase in gross profit in fiscal 2018 is directly related to the increase in sales during the fiscal year. Gross profit as a percentage of sales for fiscal 2018 was 35.7% compared to 31.8% for fiscal 2017. The gross profit percentage increase in fiscal 2018 can be mainly attributed to a product mix shift to higher margin items, offset by additional discounts given to customers to increase sales during the fiscal year.

General and administrative expenses

General and administrative expenses increased by $1.5 million, or 6.5%, to $24.3 million for the fiscal year ended March 31, 2018 from $22.8 million for the fiscal year ended March 31, 2017. The increase in general and administrative expenses for the fiscal year ended March 31, 2018 was primarily due to the following: a $1.8 million increase in payroll expenses related to increased stock compensation expense; a $554,000 increase in bank service fees due to increased sales; and a $179,000 increase in professional fees. Offsetting the increase was a $620,000 decrease to property expense; a $310,000 decrease to bad debt expenses relating to decreased credit card chargebacks; and a $66,000 net decrease to other expenses which include telephone, insurance, licenses, and office expenses. General and administrative expenses as a percentage of sales were 8.9% for the fiscal year ended March 31, 2018, compared to 9.2% for the fiscal year ended March 31, 2017.

20

Advertising expenses

Advertising expenses increased by approximately $1.6 million to approximately $19.3 million for the fiscal year ended March 31, 2018, from approximately $17.7 million for the fiscal year ended March 31, 2017. The increase in advertising expenses for fiscal 2018 was intended to stimulate sales and acquire new customers. The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $37 for the fiscal year ended March 31, 2018, compared to $34 for the fiscal year ended March 31, 2017.

Advertising cost of acquiring a new customer can be impacted by the advertising environment, the effectiveness of our advertising creative, increased advertising spending, and price competition. Historically, the advertising environment fluctuates due to supply and demand. A more favorable advertising environment may positively impact future new order sales, whereas a less favorable advertising environment may negatively impact future new order sales.

As a percentage of sales, advertising expense was 7.0% and 7.1% for the fiscal years ended March 31, 2018 and 2017, respectively. The decrease in advertising expense as a percentage of total sales for the fiscal year ended March 31, 2018 can be mainly attributed to increased sales. The Company currently anticipates advertising as a percentage of sales to be between approximately 7% and 8% for fiscal 2019. However, the advertising percentage may fluctuate quarter to quarter due to seasonality and advertising availability.

Depreciation

Depreciation increased by approximately $757,000, to approximately $2.1 million for the fiscal year ended March 31, 2018, from approximately $1.4 million for the fiscal year ended March 31, 2017. This increase to depreciation expense for the fiscal year ended March 31, 2018 can be attributed to an increase in new property and equipment additions related to the Company’s new corporate headquarters and distribution facility which were placed into service in fiscal 2017.

Other income

Other income increased by approximately $1.2 million, to approximately $1.7 million for the fiscal year ended March 31, 2018 from approximately $441,000 for the fiscal year ended March 31, 2017. The increases to other income for the fiscal year ended March 31, 2018 are related to increased rental and advertising revenue, and increased interest income. Interest income may decrease in the future as the Company utilizes its cash balances on its share repurchase plan, with approximately $10.2 million remaining at March 31, 2018, on any quarterly dividend payment, or on its operating activities.

Provision for income taxes

For the fiscal years ended March 31, 2018 and 2017, the Company recorded an income tax provision for approximately $16.5 million and $14.10 million, respectively. The increase to the income tax provision for fiscal 2018 is related to an increase in operating income offset by the income tax rate reduction pursuant to the Tax Cuts and Jobs Act of 2017 (“2017 Act”). The effective tax rate for the fiscal years ended March 31, 2018 and 2017 were 30.7% and 37.2%, respectively. The decrease to the effective rate for the fiscal year ended March 31, 2018 is due to a reduction in the Company’s corporate tax rate pursuant to the 2017 Act. In accordance with SEC Staff Bulletin No. 118, fiscal year end companies were required to determine the appropriate blended rate to apply based on their respective fiscal year end dates. Therefore, instead of applying a 35.0% federal tax rate for the fiscal year ended March 31, 2018, the Company applied a blended federal rate of 31.5%. This blended rate was applied to fiscal 2018, resulting in a tax benefit of approximately $1.9 million. The Company also recognized a stock compensation windfall benefit of $1.1 million, a one-time benefit of $430,000 based on the remeasurement reduction of our deferred tax liabilities due to the federal tax rate reduction, and recognized a one-time net benefit of $150,000 related to a return to provision true up of the fiscal 2017 income tax provision. The Company estimates its effective tax rate will be approximately 24.0% for fiscal 2019.

21

Net income

Net income increased by approximately $13.5 million, or 57%, to approximately $37.3 million for the fiscal year ended March 31, 2018 from approximately $23.8 million for the fiscal year ended March 31, 2017. The increase was primarily due to an increase to gross profit due to increased sales and a product mix shift to higher margin items during fiscal 2018. The increase was also attributed to a reduction to the Company’s income tax provision due to the 2017 Act.

Liquidity and Capital Resources

The Company’s working capital at March 31, 2019 and 2018 was approximately $107.8 million and approximately $87.1 million, respectively. The $20.7 million increase in working capital was primarily attributable to cash flow generated from operations, offset by dividends paid out in the fiscal year. Net cash provided by operating activities was $45.1 million and $37.4 million for the fiscal years ended March 31, 2019 and 2018, respectively. This change can be mainly attributed to a decrease in the Company’s inventory balance at March 31, 2019, as compared to an increase in the Company’s inventory balances at March 31, 2018. Net cash used in investing activities was $620,000 and $703,000 million for the fiscal years ended March 31, 2019 and 2018, respectively. This change in investing activities is related to decreased property and equipment additions acquired in fiscal 2019. Net cash used in financing activities was $21.9 million and $17.5 million for the fiscal years ended March 31, 2019 and 2018, respectively. This change represented an increase in the dividends paid during fiscal 2019. At March 31, 2019 the Company had approximately $40.2 million remaining under the Company’s share repurchase plan, and no shares were repurchased in fiscal 2019. Subsequent to March 31, 2019, the Company repurchased approximately 450,000 of its own shares for approximately $8.6 million, averaging approximately $19.08 per share.

Subsequent to March 31, 2019, the Company’s Board of Directors declared a quarterly dividend of $0.27 per share on May 6, 2019. The Board established a May 17, 2019 record date and a May 24, 2019 payment date. Depending on future market conditions the Company may utilize its cash and cash equivalents on the remaining balance of its current share repurchase plan, on quarterly dividends, or on its operating activities.

At March 31, 2019 the Company had no outstanding lease commitments. We are not currently bound by any long or short term agreements for the purchase or lease of capital expenditures. Any material amounts expended for capital expenditures would be the result of an increase in the capacity needed to adequately provide for any future increase in our business. To date we have paid for any needed additions to our capital equipment infrastructure from working capital funds and anticipate this being the case in the future. Presently, we have approximately $5.0 million forecasted for capital expenditures in fiscal 2020, which will be funded through cash from operations. The Company’s primary source of working capital is cash from operations. The Company presently has no need for alternative sources of working capital, and has no commitments or plans to obtain additional capital.

Off-Balance Sheet Arrangements

The Company had no off-balance sheet arrangements at March 31, 2019.

Contractual Obligations and Commitments (In thousands)

The table and information below presents the Company’s significant obligations and commitments at March 31, 2019:

	Total		Less than 1 year		1-2 years		3-5 Years		More than 5 years
Executive employment contract	$	72	$	72	$	-	$	-	$	-
Total obligations	$	72	$	72	$	-	$	-	$	-

Recent Accounting Pronouncements

Other than disclosures included in note 1 of the Consolidated Financial Statements, the Company does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

22

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk generally represents the risk that losses may occur in the value of financial instruments as a result of movements in interest rates, foreign currency exchange rates, and commodity prices. Our financial instruments include cash and cash equivalents, accounts receivable, and accounts payable. The book values of cash equivalents, accounts receivable, and accounts payable are considered to be representative of fair value because of the short maturity of these instruments. Interest rates affect our return on excess cash and cash equivalents. At March 31, 2019, we had $100.5 million in cash and cash equivalents, primarily money market accounts. A majority of our cash and cash equivalents generates interest income based on prevailing interest rates.

A significant change in interest rates would impact the amount of interest income generated from our excess cash and cash equivalents. It would also impact the market value of our cash and cash equivalents. Our cash and cash equivalents are subject to market risk, primarily interest rate and credit risk. Our investments are managed by a limited number of outside professional managers within investment guidelines set by our Board of Directors. Such guidelines include security type, credit quality, and maturity, and are intended to limit market risk by restricting our investments to high-quality debt instruments with both short and long term maturities. We do not hold any derivative financial instruments that could expose us to significant market risk. At March 31, 2019, we had no debt obligations.

23

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

PETMED EXPRESS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	25
Consolidated Balance Sheets as of March 31, 2019 and 2018	26
Consolidated Statements of Comprehensive Income for each of the three years in the period ended March 31, 2019	27
Consolidated Statements of Changes in Shareholders’ Equity for each of the three years in the period ended March 31, 2019	28
Consolidated Statements of Cash Flows for each of the three years in the period ended March 31, 2019	29
Notes to Consolidated Financial Statements	30
Report of Management on Internal Control Over Financial Reporting	42
Report of Independent Registered Public Accounting Firm	43

24

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of

PetMed Express, Inc. and subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of PetMed Express, Inc. and its subsidiaries (the Company) as of March 31, 2019 and 2018, the related consolidated statements of comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended March 31, 2019, and the related notes to the consolidated financial statements (collectively, the financial statements).  In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2019 and 2018, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2019, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated May 28, 2019 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ RSM US LLP

We have served as the Company’s auditor since 2007.

West Palm Beach, Florida

May 28, 2019

25

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except for per share amounts)

	March 31,		March 31,
	2019		2018
ASSETS
Current assets:
Cash and cash equivalents	$	100,529	$	77,936
Accounts receivable, less allowance for doubtful accounts of $39 and $35, respectively		2,542		2,292
Inventories - finished goods		21,370		23,337
Prepaid expenses and other current assets		1,408		882
Prepaid income taxes		582		788
Total current assets		126,431		105,235
Noncurrent assets:
Property and equipment, net		27,136		28,741
Intangible assets		860		860
Total noncurrent assets		27,996		29,601
Total assets	$	154,427	$	134,836
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	16,275	$	15,274
Accrued expenses and other current liabilities		2,351		2,835
Total current liabilities		18,626		18,109
Deferred tax liabilities		1,121		996
Total liabilities		19,747		19,105
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value, 5,000 shares authorized; 3 convertible shares issued and outstanding with a liquidation preference of $4 per share		9		9
Common stock, $.001 par value, 40,000 shares authorized; 20,674 and 20,601 shares issued and outstanding, respectively		21		21
Additional paid-in capital		12,478		9,381
Retained earnings		122,172		106,320
Total shareholders' equity		134,680		115,731
Total liabilities and shareholders' equity	$	154,427	$	134,836

See accompanying notes to consolidated financial statements.

26

PETMED EXPRESS, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 (In thousands, except for per share amounts)

	Year Ended March 31,
	2019		2018		2017
Sales	$	283,419	$	273,800	$	249,176
Cost of sales		188,105		175,993		169,862
Gross profit		95,314		97,807		79,314
Operating expenses:
General and administrative		24,767		24,290		22,799
Advertising		22,148		19,255		17,663
Depreciation		2,225		2,126		1,369
Total operating expenses		49,140		45,671		41,831
Income from operations		46,174		52,136		37,483
Other income (expense):
Interest income, net		1,864		658		141
Other, net		1,083		995		300
Total other income		2,947		1,653		441
Income before provision for income taxes		49,121		53,789		37,924
Provision for income taxes		11,381		16,506		14,105
Net income	$	37,740	$	37,283	$	23,819
Comprehensive income	$	37,740	$	37,283	$	23,819
Net income per common share:
Basic	$	1.84	$	1.83	$	1.18
Diluted	$	1.84	$	1.82	$	1.17
Weighted average number of common shares outstanding:
Basic		20,461		20,346		20,232
Diluted		20,491		20,433		20,378
Cash dividends declared per common share	$	1.06	$	0.85	$	0.76

See accompanying notes to consolidated financial statements.

27

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Fiscal years ended March 31, 2017, March 31, 2018, and March 31, 2019

(In thousands)

	Convertible				Common				Additional					Other
	Preferred Stock				Stock				Paid-In		Retained			Comprehensive
	Shares		Amounts		Shares		Amounts		Capital		Earnings			Gain		Total
Balance, March 31, 2016		3	$	9		20,447	$	20	$	4,871	$	78,295		$	-	$	83,195
Issuance of restricted stock, net		-		-		79		1		-		-			-		1
Share based compensation		-		-		-		-		1,935		-			-		1,935
Dividends declared		-		-		-		-		-		(15,584	)		-		(15,584	)
Net income		-		-		-		-		-		23,819			23,819		23,819
Balance, March 31, 2017		3		9		20,526		21		6,806		86,530			-		93,366
Issuance of restricted stock, net		-		-		75		-		-		-			-		-
Share based compensation		-		-		-		-		2,575		-			-		2,575
Dividends declared		-		-		-		-		-		(17,493	)		-		(17,493	)
Net income		-		-		-		-		-		37,283			37,283		37,283
Balance, March 31, 2018		3		9		20,601		21		9,381		106,320			-		115,731
Issuance of restricted stock, net		-		-		73		-		-		-			-		-
Share based compensation		-		-		-		-		3,097		-			-		3,097
Dividends declared		-		-		-		-		-		(21,888	)		-		(21,888	)
Net income		-		-		-		-		-		37,740			37,740		37,740
Balance, March 31, 2019		3	$	9		20,674	$	21	$	12,478	$	122,172		$	-	$	134,680

See accompanying notes to consolidated financial statements.

28

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended
	March 31,
	2019			2018			2017
Cash flows from operating activities:
Net income	$	37,740		$	37,283		$	23,819
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,225			2,126			1,369
Share based compensation		3,097			2,575			1,935
Deferred income taxes		125			(92	)		1,951
Bad debt expense		85			112			421
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable		(335	)		(596	)		(505	)
Inventories - finished goods		1,967			(3,109	)		5,358
Prepaid income taxes		206			(788	)		243
Prepaid expenses and other current assets		(526	)		137			1,416
Accounts payable		1,001			53			10,217
Accrued expenses and other current liabilities		(447	)		337			321
Income taxes payable		-			(659	)		659
Net cash provided by operating activities		45,138			37,379			47,204
Cash flows from investing activities:
Purchases of property and equipment		(620	)		(703	)		(10,604	)
Net cash used in investing activities		(620	)		(703	)		(10,604	)
Cash flows from financing activities:
Dividends paid		(21,925	)		(17,470	)		(15,509	)
Net cash used in financing activities		(21,925	)		(17,470	)		(15,509	)
Net increase in cash and cash equivalents		22,593			19,206			21,091
Cash and cash equivalents, at beginning of year		77,936			58,730			37,639
Cash and cash equivalents, at end of year	$	100,529		$	77,936		$	58,730
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	11,051		$	18,046		$	11,373
Dividends payable in accrued expenses	$	203		$	240		$	217

See accompanying notes to consolidated financial statements.

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies

Organization

PetMed Express, Inc. and subsidiaries, d/b/a 1-800-PetMeds (the “Company”), is a leading nationwide pet pharmacy. The Company markets prescription and non-prescription pet medications, health products, and supplies for dogs and cats, direct to the consumer. The Company markets its products through national advertising campaigns, which aim to increase the recognition of the “1-800-PetMeds” brand name and “PetMeds” family of trademarks, increase traffic on its website at www.1800petmeds.com, acquire new customers, and maximize repeat purchases. The majority of all of the Company's sales are to residents in the United States. The Company’s corporate headquarters and distribution facility are located in Delray Beach, Florida. The Company's fiscal year end is March 31, and references herein to fiscal 2019, 2018, or 2017 refer to the Company's fiscal years ended March 31, 2019, 2018, and 2017, respectively.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Revenue Recognition

The Company generates revenue by selling pet medication products and pet supplies. Certain pet supplies offered on the Company’s website are drop shipped to customers. The Company considers itself the principal in the arrangement because the Company controls the specified good before it is transferred to the customer. Revenue contracts contain one performance obligation, which is delivery of the product; customer care and support is deemed not to be a material right to the contract. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are estimated based on historical patterns; however this is not considered a key judgment. There are no amounts excluded from variable consideration. Revenue is recognized when control transfers to the customer at the point in time in which shipment of the product occurs. This key judgment is determined as the shipping point represents the point in time in which the Company has a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership. Outbound shipping and handling fees are an accounting policy election, and are included in sales as the Company considers itself the principal in the arrangement given responsibility for supplier selection and discretion over pricing. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales.

The Company disaggregates revenue in the following two categories: (1) reorder revenue vs new order revenue, and (2) internet revenue vs contact center revenue. The following table illustrates revenue by various classifications:

Year Ended March 31,
Sales (In thousands)	2019		%			2018		%			$ Variance			% Variance
Reorder Sales	$	241,780		85.3	%	$	227,513		83.1	%	$	14,267			6.3	%
New Order Sales	$	41,639		14.7	%	$	46,287		16.9	%	$	(4,648	)		-10.0	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%
Internet Sales	$	240,034		84.7	%	$	230,319		84.1	%	$	9,715			4.2	%
Contact Center Sales	$	43,385		15.3	%	$	43,481		15.9	%	$	(96	)		-0.2	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies (Continued)

Year Ended March 31,
Sales (In thousands)	2018		%			2017		%			$ Variance			% Variance
Reorder Sales	$	227,513		83.1	%	$	206,299		82.8	%	$	21,214			10.3	%
New Order Sales	$	46,287		16.9	%	$	42,877		17.2	%	$	3,410			8.0	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%
Internet Sales	$	230,319		84.1	%	$	205,643		82.5	%	$	24,676			12.0	%
Contact Center Sales	$	43,481		15.9	%	$	43,533		17.5	%	$	(52	)		-0.1	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%

The majority of the Company’s sales are paid by credit cards and the Company usually receives the cash settlement in two to three banking days. Credit card sales minimize accounts receivable balances relative to sales. The Company had no material contract asset or liability balances as of March 31, 2019 and 2018.

The Company maintains an allowance for doubtful accounts for losses that the Company estimates will arise from customers’ inability to make required payments, arising from either credit card charge-backs or insufficient funds checks. The Company determines its estimates of the uncollectibility of accounts receivable by analyzing historical bad debts and current economic trends. The allowance for doubtful accounts was approximately $39,000 at March 31, 2019 compared to $35,000 at March 31, 2018.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at March 31, 2019 and 2018 consisted of the Company’s cash accounts and money market accounts with a maturity of three months or less. The carrying amount of cash equivalents approximates fair value. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Inventories

Inventories consist of prescription and non-prescription pet medications and pet supplies that are available for sale and are priced at the lower of cost or net realizable value using a weighted average cost method. The Company writes down its inventory for estimated obsolescence. The inventory reserve was approximately $54,000 and $58,000 at March 31, 2019 and 2018, respectively.

Property and Equipment

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Our building is being depreciated over a period of thirty years. The furniture, fixtures, equipment, and computer software are being depreciated over periods ranging from three to ten years.

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies (Continued)

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the asset to the undiscounted cash flows expected to be generated from the asset.

Intangible Assets

The intangible assets consist of a toll-free telephone number and an internet domain name. In accordance with the ASC Topic 350 (“Goodwill and Other Intangible Assets”) the intangible assets are not being amortized, and are subject to an annual review for impairment.

Fair Value of Financial Instruments

The carrying amounts of the Company's cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments.

Advertising

The Company's advertising expense consists primarily of Internet marketing, direct mail/print, and television advertising. Internet costs are expensed in the month incurred and direct mail/print advertising costs are expensed when the related catalogs, brochures, and postcards are produced, distributed, or superseded. Television advertising costs are expensed as the advertisements are televised.

Comprehensive Income

The Company applies ASC Topic 220 (“Reporting Comprehensive Income”) which requires that all items that are recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The items of other comprehensive income that are typically required to be displayed are foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. For the fiscal years ended March 31, 2019, 2018 and 2017 the Company had no unrealized gains or losses.

Income Taxes

The Company accounts for income taxes under the provisions of ASC Topic 740 (“Accounting for Income Taxes”) which generally requires the recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting carrying values and the tax bases of assets and liabilities, and are measured by applying enacted tax rates and laws for the taxable years in which those differences are expected to reverse. As required by “Accounting for Uncertainty in Income Taxes” guidance, which clarifies ASC Topic 740, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the Consolidated Financial Statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company applies “Accounting for Uncertainty in Income Taxes” guidance to all tax positions for which the statute of limitations remains open. The Company files tax returns in the U.S. federal jurisdiction and Florida and Virginia.  With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years ending March 31, 2013, or earlier. Any interest and penalties related to income taxes will be recorded to other income (expenses).

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies (Continued)

Business Concentrations

The Company purchases its products from a variety of sources, including certain manufacturers, domestic distributors, and wholesalers. We have multiple suppliers for each of our products to obtain the lowest cost. There were four suppliers from whom we purchased approximately 50% of all products in both fiscal 2019 and fiscal 2018.

Accounting for Share Based Compensation

The Company records compensation expense associated with restricted stock in accordance with ASC Topic 718 (“Share Based Payment”). The compensation expense related to all of the Company’s stock-based compensation arrangements is recorded as a component of general and administrative expenses.

Recent Accounting Pronouncements

In February 2016, the FASB issued guidance on leases which supersedes the current lease guidance. The core principle requires lessees to recognize the assets and liabilities that arise from nearly all leases in the statement of financial position. Accounting applied by lessors will remain largely consistent with previous guidance, additional changes set to align lessor accounting with the revised lessee model and the FASB’s revenue recognition guidance. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this standard on April 1, 2019. The Company has very few lease arrangements. We do not expect the standard to have a material impact on our consolidated financial statements.

The Company does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

(2) Property and Equipment

Major classifications of property and equipment consist of the following (in thousands):

	March 31,
	2019			2018
Building	$	14,997		$	14,997
Land		3,700			3,700
Building Improvements		2,817			2,807
Computer Software		5,891			5,504
Furniture, fixtures and equipment		8,128			7,906
		35,533			34,914
Less: accumulated depreciation		(8,397	)		(6,173	)
Property and equipment, net	$	27,136		$	28,741

(3) Valuation and Qualifying Accounts

Activity in the Company's valuation and qualifying accounts consists of the following (in thousands):

	Year Ended March 31,
	2019			2018			2017
Allowance for doubtful accounts:
Balance at beginning of period	$	35		$	27		$	13
Provision for doubtful accounts		85			112			421
Write-off of uncollectible accounts receivable		(81	)		(104	)		(407	)
Balance at end of year	$	39		$	35		$	27

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4) Accrued Expenses and Other Current Liabilities

Major classifications of accrued expenses and other current liabilities consist of the following (in thousands):

	March 31,
	2019		2018
Accrued sales tax	$	323	$	449
Accrued credit card fees		404		381
Accrued salaries and benefits		685		966
Accrued professional expenses		281		320
Accrued sales return allowance		184		191
Accrued dividends payable		203		240
Accrued real estate taxes		87		87
Other accrued liabilities		184		201
Accrued expenses and other current liabilities	$	2,351	$	2,835

(5) Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows (in thousands):

	March 31,
	2019			2018
Deferred tax assets:
Accrued expenses	$	298		$	346
Deferred stock compensation		412			353
Bad debt and inventory reserves		22			22
Total deferred tax assets		732			721
Deferred tax liabilities:
Property and equipment		1,853			1,717
Total net deferred taxes	$	(1,121	)	$	(996	)

At March 31, 2019, the Company had no federal net operating loss carryforwards.

The components of the income tax provision consist of the following (in thousands):

	Year Ended March 31,
	2019		2018			2017
Current taxes
Federal	$	9,718	$	15,012		$	11,095
State		1,538		1,586			1,059
Total current taxes		11,256		16,598			12,154
Deferred taxes
Federal		108		(83	)		1,781
State		17		(9	)		170
Total deferred taxes		125		(92	)		1,951
Total provision for income taxes	$	11,381	$	16,506		$	14,105

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5) Income Taxes (Continued)

The reconciliation of income tax provision computed at the U.S. federal statutory tax rates to income tax expense is as follows (in thousands):

	Year Ended March 31,
	2019			2018			2017
Income taxes at U.S. statutory rates	$	10,315		$	16,943		$	13,274
State income taxes, net of federal tax benefit		1,233			1,078			858
Restricted stock windfall adjustment		(176	)		(1,086	)		-
Reduction of deferred tax liability due to rate reduction		-			(430	)		-
Other		9			1			(27	)
Total provision for income taxes	$	11,381		$	16,506		$	14,105

The 2017 Tax Cuts and Jobs Act (the “2017 Tax Act”) was signed into law on December 22, 2017.  The 2017 Tax Act made a significant number of changes to the existing U.S. Internal Revenue Code, including a permanent reduction of the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017. In accordance with SEC Staff Bulletin No. 118, fiscal year end companies were required to determine the appropriate blended rate to apply based on their respective fiscal year end dates. Therefore, instead of applying a 35.0% federal tax rate for the fiscal year ended March 31, 2018, the Company applied a blended federal rate of 31.5%. This blended rate was applied to fiscal 2018, resulting in a tax benefit of approximately $1.9 million. As a result, the Company recorded a provisional income tax benefit of approximately $430,000 related to the re-measurement of deferred tax assets and liabilities resulting from the reduction of the federal corporate tax rate.  In fiscal 2019 the Company recognized a stock compensation windfall benefit of approximately $176,000, and recognized a one-time charge of approximately $8,000 related to a return to provision true up of the fiscal 2018 income tax provision. In fiscal 2018 the Company also recognized a stock compensation windfall benefit of approximately $1.1 million, and recognized a one-time net benefit of approximately $150,000 related to a return to provision true up of the fiscal 2017 income tax provision.

(6) Shareholders’ Equity

Preferred Stock

In April 1998, the Company issued 250,000 shares of its $.001 par value preferred stock at a price of $4.00 per share, less issuance costs of $112,187. Each share of the preferred stock is convertible into approximately 4.05 shares of common stock at the election of the shareholder. The shares have a liquidation value of $4.00 per share and may pay dividends at the sole discretion of the Company. The Company does not anticipate paying dividends to the preferred shareholders in the foreseeable future. Each share of preferred stock is entitled to one vote on all matters submitted to a vote of shareholders of the Company. At March 31, 2019 and 2018, 2,500 shares of the convertible preferred stock remained unconverted and outstanding.

Share Repurchase Plan

On November 8, 2006, the Company's Board of Directors approved a share repurchase plan of up to $20.0 million. On October 31, 2008, November 1, 2010, and August 1, 2011, the Company’s Board of Directors approved an increase under the repurchase plan each for an additional $20.0 million. On January 25, 2019 the Company’s Board of Directors authorized an additional $30.0 million under the repurchase plan. The repurchase plan is intended to be implemented through purchases made from time to time in either the open market or through private transactions at the Company's discretion, subject to market conditions and other factors, in accordance with Securities and Exchange Commission requirements.

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6) Shareholders’ Equity (Continued)

There can be no assurances as to the precise number of shares that will be repurchased under the share repurchase plan, and the Company may discontinue the share repurchase plan at any time subject to compliance with applicable regulatory requirements. Shares purchased pursuant to the share repurchase plan will either be cancelled or held in the Company's treasury. During both fiscal 2019 and 2018 the Company had no share repurchases. At March 31, 2019 the Company had approximately $40.2 million remaining under the Company’s share repurchase plan.

Dividends

On May 8, 2017 the Company’s Board of Directors increased the quarterly dividend to $0.20 per share, then on January 22, 2018 the Company’s Board of Directors increased the quarterly dividend to $0.25 per share, and then on July 23, 2018 the Company’s Board of Directors increased the quarterly dividend to $0.27 per share, on its common stock. The Company intends to continue to pay regular quarterly dividends; however the declaration and payment of future dividends is discretionary and will be subject to a determination by the Board of Directors each quarter following its review of the Company’s financial performance.

During fiscal 2019, our Board of Directors declared the following dividends:

Declaration Date	Per Share Dividend		Record Date	Total Amount (In thousands)		Payment Date
May 7, 2018	$	0.25	May 18, 2018	$	5,150	May 25, 2018
July 23, 2018	$	0.27	August 3, 2018	$	5,584	August 10, 2018
October 22, 2018	$	0.27	November 5, 2018	$	5,582	November 16, 2018
January 21, 2019	$	0.27	February 4, 2019	$	5,582	February 15, 2019

(7) Net Income Per Share

In accordance with the provisions of ASC Topic 260 (“Earnings Per Share”) basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per common share includes the dilutive effect of potential restricted stock and the effects of the potential conversion of preferred shares, calculated using the treasury stock method. Unvested restricted stock, and convertible preferred shares issued by the Company represent the only dilutive effect reflected in diluted weighted average shares outstanding. The following is a reconciliation of the numerators and denominators of the basic and diluted net income per share computations for the periods presented (in thousands, except for per share amounts):

	Year Ended March 31,
	2019		2018		2017
Net income (numerator):
Net income	$	37,740	$	37,283	$	23,819
Shares (denominator)
Weighted average number of common shares outstanding used in basic computation		20,461		20,346		20,232
Common shares issuable upon the vesting of restricted stock		20		77		136
Common shares issuable upon conversion of preferred shares		10		10		10
Shares used in diluted computation		20,491		20,433		20,378
Net income per common share:
Basic	$	1.84	$	1.83	$	1.18
Diluted	$	1.84	$	1.82	$	1.17

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7) Net Income Per Share (Continued)

At March 31, 2019 and 2018, 150,017 and 77,350 shares of common restricted stock, respectively, were excluded from the computations of diluted net income per common share, as their inclusion would have had an anti-dilutive effect on diluted net income per common share. At March 31, 2017, all restricted stock was included in the diluted net income per common share computation.

(8) Restricted Stock

On July 28, 2006, the Company received shareholder approval for the adoption of the 2006 Employee Equity Compensation Restricted Stock Plan (the “2006 Employee Plan”) and the 2006 Outside Director Equity Compensation Restricted Stock Plan (the “2006 Director Plan”). The purpose of the plans was to promote the interests of the Company by securing and retaining both employees and outside directors. The Company had reserved 1.0 million shares of common stock for issuance under the Employee Plan, and 200,000 shares of common stock for issuance under the Director Plan. In July 2012, the Company received shareholder approval to ratify the amendment to the Company’s Director Plan passed by the Board of Directors to increase the number of shares available for issuance under the Director Plan from 200,000 to 400,000. Additionally, the Company received shareholder approval to ratify the amendment passed by the Board of Directors to provide for a 10% automatic increase every year in the amount of shares available for issuance under both of the plans.

In July 2015, the Company’s 2015 Outside Director Equity Compensation Restricted Stock Plan (“2015 Director Plan”) became effective upon the approval of the plan by the Company’s Shareholders. The 2015 Director Plan authorizes 400,000 shares of the Company's common stock available for issuance under the plan, and provides for an automatic increase every year in the amount of shares available for issuance under the plan of 10% of the shares authorized under the plan. In July 2016, the Company’s 2016 Employee Equity Compensation Restricted Stock Plan (“2016 Employee Plan”) became effective upon the approval of the plan by the Company’s Shareholders. The 2016 Employee Plan authorizes 1,000,000 shares of the Company's Common stock available for issuance under the plan. The value of the restricted stock is determined based on the market value of the stock at the issuance date. The restriction period or forfeiture period is determined by the Company’s Board and is to be no less than 1 year and no more than ten years.

At March 31, 2019, the Company had 972,175 restricted common shares issued under the 2006 Employee Plan, 85,183 restricted common shares issued under the 2016 Employee Plan, 272,000 restricted common shares issued under the 2006 Director Plan, and 97,500 restricted common shares issued under the 2015 Director Plan. All shares were issued subject to a restriction or forfeiture period which lapses ratably on the first, second, and third anniversaries of the date of grant, and the fair value of which is being amortized over the three-year restriction period. For the fiscal years ended March 31, 2019, 2018, and 2017, the Company recognized compensation expense related to the Employee and Director Plans of $3.1 million, $2.6 million, and $1.9 million, respectively. A summary of the Company’s non-vested restricted stock at March 31, 2019 is as follows:

	Employee Plan Number of Shares (In thousands)			Director Plan Number of Shares (In thousands)			Both Plans Number of Shares (In thousands)
Non-vested restricted stock outstanding at March 31, 2018		133			60			193
Restricted stock granted		47			38			85
Restricted stock vested		(86	)		(30	)		(116	)
Restricted stock forfeited or expired		(12	)		-			(12	)
Non-vested restricted stock outstanding at March 31, 2019		82			68			150

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Restricted Stock (Continued)

At March 31, 2019 and 2018, there were 150,017 and 192,968, non-vested restricted stock shares outstanding, respectively. During the fiscal years ended March 31, 2019 and 2018, the Company issued, net of forfeitures, 72,899 and 75,081 restricted shares, respectively. At March 31, 2019 and 2018, there were $3.9 million and $4.4 million of unrecognized compensation cost related to the non-vested restricted stock awards, respectively, which is expected to be recognized over the remaining weighted average vesting period of 1.7 years and 1.5 years for fiscal 2019 and 2018, respectively.

(9) Fair Value Measurements

The Company carries cash and cash equivalents and investments at fair value in the Consolidated Balance Sheets. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. ASC Topic 820 (“Fair Value Measurements”) establishes a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s cash equivalents are classified within Level 1. At March 31, 2019 and 2018 the Company had invested the majority of its cash and cash equivalents balance in money market funds (level 1).

(10) Commitments and Contingencies

Legal Matters and Routine Proceedings

The Company is a defendant in a putative class action lawsuit, filed in May 2019, in the United States District Court for the Southern District of New York seeking injunctive and monetary relief styled Valentin Reid, on behalf of himself and all others similarly situated v. PetMed Express, Inc., Case No. 19-cv-4169, alleging that the Company’s website, www.1800petmeds.com, does not comply with the Americans with Disabilities Act (“ADA”), New York State Human Rights Law (“NYSHRL”), and New York City Human Rights Law (“NYCHRL”), and discriminates against visually impaired individuals. The Company denies any wrongdoing and intends to vigorously defend itself against such allegations. At this stage, the company can neither accurately predict the likelihood of an unfavorable or adverse outcome nor provide an estimate of the amount or range of potential loss, if any.

In January 2019, a putative class action complaint was filed by a different individual in the United States District Court for the Southern District of New York alleging that company’s website, www.1800petmeds.com, does not comply with the ADA, NYSHRL, and NYCHRL, and discriminates against visually impaired individuals. The Plaintiff named a New York corporation named Pet Meds Inc., which is not related or affiliated with the Company, as the defendant. However, the Plaintiff has sought to remedy that error by requesting leave to file an amended complaint naming the Company, which request the Court granted on April 9, 2019. On April 18, 2019, the Court granted the Plaintiff’s request to transfer the case to the United States District Court for the Eastern District of New York, where it is currently pending. The matter is styled Brian Fischler, individually and on behalf of all other persons similarly situated v. PetMed Express, Inc.; Case No. 19-cv-02391. The Company denies any wrongdoing and it intends to vigorously defend itself against such allegations. At this early juncture, the Company can neither accurately predict the likelihood of an unfavorable or adverse outcome nor provide an estimate of the amount or range of potential loss, if any.

38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10) Commitments and Contingencies (Continued)

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.

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 for the fiscal years ended March 31, 2017. 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, 2019, the leases with these two tenants had a remaining weighted average lease term of 4.5 years. The Company recorded approximately $622,000 and $604,000 in rental revenue in fiscal 2019 and 2018, respectively, which was included in other income. The Company expects to receive the following future lease payments over the next five years: $645,000 in fiscal 2020; $378,000 in fiscal 2021; $289,000 in fiscal 2022; $298,000 in fiscal 2023; and $307,000 in fiscal 2024.

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 Compensation Restricted Stock Plan and the restrictions lapse ratably over a three-year period. Based on the recommendation of the Compensation Committee of the Board of Directors (“Committee”) and the approval of the Board of Directors (“Board”), the Company amended the existing Executive Employment Agreement of Menderes Akdag, the Company’s President and Chief Executive Officer. On March 15, 2019, Amendment No. 5a to the Executive Employment Agreement was entered into with Mr. Akdag (“Agreement”). Mr. Akdag’s Executive Employment Agreement was set to expire on March 16, 2019 pursuant to Amendment No. 5 to the Executive Employment Agreement. With the intent to enter into amendment No. 6 to the Executive Employment Agreement, the Committee had been working with a nationally recognized compensation consulting firm to ensure executive pay to the Chief Executive Officer of the Company is consistent with a selected peer group and contains appropriate performance benchmarks. At the time of entering into the Agreement, the report from the compensation consulting firm had been received and analyzed, and the Chairman of the Board had presented the results to and was negotiating with the Chief Executive Officer to agree to final terms that would be acceptable to all parties, subject to final Board approval. The Agreement amends certain provisions of the Executive Employment Agreement as follows: the term of the Executive Employment Agreement was extended until May 13, 2019, commencing on March 16, 2019; and Mr. Akdag’s salary remained at $600,000 per year throughout the term of the Agreement. See also note 12, subsequent events.

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(11) Employee Benefit Plan

The Company maintains a 401(k) Savings Plan for eligible employees.  The plan is a defined contribution plan that is administered by the Company. All regular, full-time employees are eligible for voluntary participation upon completing one year of service and having attained the age of 21.  The plan provides for growth in savings through contributions and income from investments.  It is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. Plan participants are allowed to contribute a specified percentage of their base salary. In 2006, the Company approved a matching contribution which is funded subsequent to the calendar year. During the fiscal years ended March 31, 2019, 2018, and 2017, the Company charged $192,000, $166,000, and $181,000, respectively, of 401(k) matching contribution and administration expense to general and administrative expenses.

(12) Subsequent Events

On May 6, 2019, the Company’s Board of Directors declared a quarterly dividend of $0.27 per share on its common stock. The $5.6 million dividend was paid on May 24, 2019, to shareholders of record at the close of business on May 17, 2019.

Based on the recommendation of the Compensation Committee of the Board of Directors (Committee) and the approval of the Board of Directors (“Board”), the Company amended the existing Executive Employment Agreement of Menderes Akdag, the Company’s President and Chief Executive Officer. On May 13, 2019, Amendment No. 6 to the Executive Employment Agreement was entered into with Mr. Akdag (“Agreement”). Mr. Akdag’s Agreement was set to expire on May 13, 2019 pursuant to Amendment No. 5a to the Agreement. The Committee worked with a nationally recognized compensation consulting firm to ensure executive pay to the Chief Executive Officer of the Company was consistent with a selected peer group and contained appropriate performance bench marks.

The Agreement amends certain provisions of the Executive Employment Agreement as follows: the term of the Executive Employment Agreement is extended until the earlier of (i) the date of the Company’s 2020 Annual Stockholders Meeting, or (ii) August 1, 2020; and Mr. Akdag’s salary will remain $600,000 per year throughout the term of the Agreement subject to a percentage increase adjustment, if any, commencing on the pay period ending on May 17, 2019, based on pre-determined individual and corporate performance goals and objectives for fiscal 2019 approved by the Board.

According to the Agreement, on July 26, 2019 Mr. Akdag will also be granted 40,000 restricted shares of the Company’s common stock to vest on July 26, 2020, and the Company will pay Mr. Akdag an additional amount (“Gross-Up Payment”) to cover Mr. Akdag’s withholding taxes which are required to be paid as a result of the issuance of the restricted shares. The Gross-Up Payment method used to determine Mr. Akdag’s withholding amount will be the same method the Company currently utilizes for the gross-up payment calculation for other employees of the Company as approved by the Board of Directors, which currently is approved for up to 28.2% (based on the current IRS withholding guidelines according to IRS guidelines of 22%) for employees. Future issuances of restricted shares will be based on pre-determined individual and corporate performance goals and objectives approved by the Board.

In addition, as compensation for an approximate four month delay from the expiration date of Amendment 5 to the Executive Employment Agreement to July 26, 2019, in addition to Mr. Akdag receiving a salary in accordance with his previous annual rate of $600,000, Mr. Akdag will also receive a one-time payment of $10,800 in full satisfaction of any lost amounts in earned dividends for restricted shares that would have been issued to Mr. Akdag on March 16, 2019 in connection with his compensation following the expiration date of Amendment 5 to the Executive Employment Agreement.

The Agreement also provides that in the event that a Change in Control (as defined in the Executive Employment Agreement) of the Company shall occur at any time, Mr. Akdag shall have the right to terminate his employment under the Executive Employment Agreement upon thirty (30) days written notice given at any time within one (1) year after the occurrence of such event, and upon such termination, Mr. Akdag shall be entitled to a one-time payment of two times his salary as of the date of such termination.

Subsequent to March 31, 2019, the Company repurchased approximately 450,000 of its own shares for approximately $8.6 million, averaging approximately $19.08 per share.

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(13) Quarterly Financial Data (Unaudited)

Summarized unaudited quarterly financial data for fiscal 2019 and 2018 is as follows (in thousands, except for per share amounts):

Quarter Ended:	June 30, 2018		September 30, 2018		December 31, 2018		March 31, 2019
Sales	$	87,390	$	71,396	$	60,068	$	64,565
Gross Profit	$	29,954	$	25,255	$	19,381	$	20,724
Income from operations	$	15,757	$	13,203	$	9,413	$	7,802
Net income	$	12,582	$	10,752	$	7,787	$	6,620
Diluted net income per common share	$	0.62	$	0.52	$	0.38	$	0.32

Quarter Ended:	June 30, 2017		September 30, 2017		December 31, 2017		March 31, 2018
Sales	$	79,657	$	66,711	$	60,110	$	67,322
Gross Profit	$	27,465	$	23,479	$	21,944	$	24,919
Income from operations	$	14,416	$	12,248	$	11,468	$	14,004
Net income	$	9,276	$	8,760	$	9,064	$	10,183
Diluted net income per common share	$	0.45	$	0.43	$	0.44	$	0.50

41

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for the preparation and integrity of the Consolidated Financial Statements appearing in our Annual Report on Form 10-K. The financial statements were prepared in conformity with generally accepted accounting principles appropriate in the circumstances and, accordingly, include certain amounts based on our best judgments and estimates. Financial information in the Annual Report on Form 10-K is consistent with that in the financial statements.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 (“Exchange Act”). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Consolidated Financial Statements. Our internal control over financial reporting is supported by a team of consultants and appropriate reviews by management, written policies and guidelines, careful selection and training of qualified personnel, and a written Corporate Code of Business Conduct and Ethics adopted by our Company’s Board of Directors, applicable to all Company Directors and all officers and employees of our Company and subsidiaries.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Audit Committee (“Committee”) of our Company’s Board of Directors, comprised solely of Directors who are independent in accordance with the requirements of The NASDAQ Stock Market LLC listing standards, the Exchange Act and the Company’s Corporate Governance Guidelines, meets with the independent auditors and management periodically to discuss internal control over financial reporting, and auditing and financial reporting matters. The Committee reviews with the independent auditors the scope and results of the audit effort. The Committee also meets periodically with the independent auditors without management present to ensure that the independent auditors have free access to the Committee. Our Audit Committee’s Report can be found in the Company’s 2019 Proxy Statement.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2019. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework - 2013. Based on our assessment, management believes that the Company maintained effective internal control over financial reporting as of March 31, 2019.

The Company’s independent auditors, RSM US LLP, a registered public accounting firm, are appointed by the Audit Committee of the Company’s Board of Directors, subject to ratification by our Company’s shareholders. RSM US LLP have audited and reported on the Consolidated Financial Statements of PetMed Express, Inc. and subsidiaries, and issued a report on the Company’s internal control over financial reporting. The reports of the independent auditors are contained in our Annual Report on Form 10-K.

/s/ Menderes Akdag

Menderes Akdag

President, Chief Executive Officer, Director

May 28, 2019

/s/ Bruce S. Rosenbloom

Bruce S. Rosenbloom

Chief Financial Officer

May 28, 2019

42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of
PetMed Express, Inc. and subsidiaries

Opinion on the Internal Control Over Financial Reporting

We have audited PetMed Express, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of March 31, 2019, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.  In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2019, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company and our report dated May 28, 2019 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

West Palm Beach, Florida
May 28, 2019

43

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of March 31, 2019, the end of the period covered by this report (the "Evaluation Date"). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date, that our disclosure controls and procedures were effective such that the information relating to PetMed Express, Inc., including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2019 based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control — Integrated Framework, management concluded that our internal control over financial reporting was effective, as of March 31, 2019, as stated in our report which is included herein. Our internal control over financial reporting as of March 31, 2019 has been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report which is contained in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal controls over financial reporting during the fourth quarter ended March 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Not applicable.

44

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this item will be set forth in our Proxy Statement, to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2019, relating to our 2019 Annual Meeting of Stockholders to be held on July 26, 2019, and is incorporated herein by reference.

We adopted a Corporate Code of Business Conduct and Ethics applicable to all officers, directors, and employees. The Company’s Corporate Code of Business Conduct and Ethics is available on our website at www.1800petmeds.com under “About Us - Corporate Governance”. You may also obtain a copy of our Corporate Code of Business Conduct and Ethics free of charge by contacting Investor Relations at 1-800-738-6337.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be set forth in our Proxy Statement, to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2019, relating to our 2019 Annual Meeting of Stockholders to be held on July 26, 2019, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item (other than information required by Item 201(d) of Regulation S-K with respect to equity compensation plans, which is set forth under Item 5. in this Annual Report on Form 10-K) will be set forth in our Proxy Statement, to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2019, relating to our 2019 Annual Meeting of Stockholders to be held on July 26, 2019, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item will be set forth in our Proxy Statement, to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2019, relating to our 2019 Annual Meeting of Stockholders to be held on July 26, 2019, and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item will be set forth in our Proxy Statement, to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2019, relating to our 2019 Annual Meeting of Stockholders to be held on July 26, 2019, and is incorporated herein by reference.

45

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Annual Report on Form 10-K.

(1) Consolidated Financial Statements – See the Index to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

The following exhibits are filed as part of this Annual Report on Form 10-K or hereby incorporated by reference to exhibits previously filed with the SEC.

(3) Articles of Incorporation and By-Laws

3.1 Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10-SB, File No. 000-28827, filed January 10, 2000).

3.2 Articles of Amendment to the Amended and Restated Articles of Incorporation filed June 6, 2001 (incorporated by reference to Exhibit 3.2 of the Registrant’s Form 10-K for the year ended March 31, 2015).

3.3 First Amended and Restated By-Laws of PetMed Express, Inc. (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K, filed February 3, 2017).

(4) Instruments Defining the Rights of Security Holders

4.1 Specimen common stock certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form 10-SB, File No. 000-28827, filed January 10, 2000).

4.2 Description of Securities*

(10) Material Contracts

10.1+ Employment Agreement with Menderes Akdag (incorporated by reference to Exhibit 10 of the Registrant’s Form 8-K filed March 30, 2001).

10.5+ Amended and Restated 2006 Employee Equity Compensation Restricted Stock Plan (incorporated by reference to Exhibit B of our definitive Proxy Statement for our 2012 Annual Meeting of Stockholders filed June 15, 2012).

10.5.1 Form of Restricted Stock Agreement used for grants of restricted stock under the Amended and Restated 2006 Employee Equity Compensation Restricted Stock Plan (incorporated by reference to Exhibit 10.5.1 of the Registrant’s Form 10-K for the year ended March 31, 2017 filed May 23, 2017).*

10.6+ Amended and Restated 2006 Outside Director Equity Compensation Restricted Stock Plan (incorporated by reference to Exhibit A of our definitive Proxy Statement for our 2012 Annual Meeting of Stockholders filed June 15, 2012).

10.6.1 Form of Restricted Stock Agreement used for grants of restricted stock under the Amended and Restated 2006 Outside Director Equity Compensation Restricted Stock Plan (incorporated by reference to Exhibit 10.6.1 of the Registrant’s Form 10-K for the year ended March 31, 2017 filed May 23, 2017).*

10.7+ Employment Letter with Bruce Rosenbloom dated May 30, 2001 (incorporated by reference to Exhibit 10.9 of the Registrant’s Form 8-K filed April 7, 2009).

10.10+ 2015 Outside Director Equity Compensation Restricted Stock Plan (incorporated by reference to Exhibit B of our definitive Proxy Statement for our 2015 Annual Meeting of Stockholders filed June 8, 2015).

10.10.1 Form of Restricted Stock Agreement used for grants of restricted stock under the 2015 Outside Director Equity Compensation Restricted Stock Plan (incorporated by reference to Exhibit 10.10.1 of the Registrant’s Form 10-K for the year ended March 31, 2017 filed May 23, 2017).*

10.11 Agreement of Purchase and Sale [420 South Congress Avenue] (incorporated by reference to Exhibit 10.11 of the Registrant’s Form 10-Q for the quarter ended December 31, 2015, filed February 2, 2016).

10.12+ Amendment Number 5 to Executive Employment Agreement with Menderes Akdag (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed February 2, 2016).

10.13+ 2016 Employee Equity Compensation Restricted Stock Plan, including form of Restricted Stock Agreement used for grants of restricted stock (incorporated by reference to Exhibit A of our definitive Proxy Statement for our 2016 Annual Meeting of Stockholders filed June 13, 2016).

46

10.14+ Amendment No. 1 to Offer Letter with Bruce Rosenbloom, Chief Financial Officer (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 10-Q for the quarter ended September 30, 2017, filed October 31, 2017).

10.15+ Amendment Number 5a to Executive Employment Agreement with Menderes Akdag (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed March 18, 2019).

10.16+ Amendment Number 6 to Executive Employment Agreement with Menderes Akdag (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed May 13, 2019).

(21) Subsidiaries of Registrant

21.1 Subsidiaries of Registrant*

(23) Consents of Experts and Counsel

23.1 Consent of RSM US LLP*

(31) Certifications

31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).*

31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).*

(32) Certifications

32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 1350.**

___________

*Filed herewith 

**Furnished herewith

+ Indicated a management contract or compensatory plan or arrangement

101.INS*** XBRL Instance

101.SCH*** XBRL Taxonomy Extension Schema

101.CAL*** XBRL Taxonomy Extension Calculation

101.DEF*** XBRL Taxonomy Extension Definition

101.LAB*** XBRL Taxonomy Extension Labels

101.PRE*** XBRL Taxonomy Extension Presentation

*** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

ITEM 16. FORM 10–K SUMMARY.

None.

47

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 28, 2019

 PETMED EXPRESS, INC.

 (the “registrant”)

 By: /s/ Menderes Akdag

 Menderes Akdag

 Chief Executive Officer and President

 (principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on May 28, 2019.

SIGNATURE	TITLE
/s/ Menderes Akdag	Chief Executive Officer and President (principal executive officer)
Menderes Akdag	Officer and Director
/s/ Robert C. Schweitzer	Chairman of the Board
Robert C. Schweitzer	Director
	Chief Financial Officer and Treasurer
/s/ Bruce S. Rosenbloom	(principal financial and accounting officer)
Bruce S. Rosenbloom	Officer
/s/ Ronald J. Korn	Director
Ronald J. Korn
/s/ Gian M. Fulgoni	Director
Gian M. Fulgoni
/s/ Frank J. Formica	Director
Frank J. Formica /s/ Leslie C.G. Campbell	Director
Leslie C.G. Campbell

 48

EX-4.2

Exhibit 4.2

DESCRIPTION OF THE COMPANY’S SECURITIES REGISTERED

PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

The following is a brief description of the common stock, $0.001 par value per share (the “Common Stock”), of PetMed Express, Inc., a Florida corporation (the “Company”), which is the only security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”).

Description of Common Stock

General

The following descriptions of our Common Stock and of certain provisions of Florida law do not purport to be complete and are subject to and qualified in their entirety by reference to our amended and restated articles of incorporation, our amended and restated bylaws and the Florida Business Corporation Act, as amended (the “Florida Act”). The Company has authorized 40,000,000 shares of Common Stock of which as of May 28, 2019, 20,223,354 shares of Common Stock are issued and outstanding. All of our outstanding shares of Common Stock are fully paid and non-assessable. Our Common Stock is listed on the NASDAQ Global Select Market under the symbol “PETS.”

Common Stock

Holders of the Common Stock have no pre-emptive, redemption, subscription or conversion rights. Each outstanding share of Common Stock is entitled to one vote on all matters submitted to a vote of the Company's shareholders. Subject to the dividend rights of the holders of any outstanding preferred stock, each share of Common Stock is entitled to participate equally with respect to dividends as may be declared by the board of directors out of funds legally available therefor. In the case of voluntary or involuntary liquidation, distribution or sale of assets, dissolution, or winding up of the Company, holders of our Common Stock are entitled to receive a pro rata share of the amount distributed after provisions for payment of all debts, other liabilities and any liquidation preferences of outstanding preferred stock. The Florida Act also may affect the terms of these securities.

Limitations on Rights of Holders of Common Stock – Preferred Stock

The rights of holders of Common Stock may be materially limited or qualified by the rights of holders of preferred stock that we may issue in the future. Set forth below is a description of the Company’s authority to issue preferred stock and the possible terms of that stock.

Our amended and restated articles of incorporation authorizes our board of directors, without further shareholder action, to provide for the issuance of up to 5,000,000 shares of preferred stock, with a par value of $.001 per share, in one or more series, and to fix the designations, preferences, conversion rights, cumulative, relative, participating, optional or other rights, including voting rights, qualifications, limitations or restrictions, redemption and liquidation preferences of each of these series. Of the preferred stock, 250,000 shares have been designated Convertible Preferred Stock of which as of May 28, 2019, 2,500 shares of Convertible Preferred Stock are issued and outstanding. We may amend from time to time our amended and restated articles of incorporation to increase the number of authorized shares of preferred stock. Any such amendment would require the approval of the holders of a majority of our shares of Common Stock entitled to vote.

Shareholder Action by Written Consent and Special Meeting

Our Bylaws provide for action by our shareholders without a meeting with the written consent of shareholders holding the number of shares necessary to approve such action if it were taken at a meeting at which all shares entitled to vote thereon were present. Our Bylaws also provide that shareholder action can be taken at an annual meeting of the shareholders or at a special meeting which may be called, for any purpose or purposes, by the board of directors or the person or persons authorized to do so by the board of directors and must be called by the Secretary if the holders of not less than twenty percent of all votes entitled to be cast on any issue proposed to be considered at such special meeting sign, date and deliver to the Secretary one or more written demands for a special meeting, describing the purpose or purposes for which it is to be held.

Exhibit 4.2 Page 1 of 2

Authorized but Unissued Shares 

Our authorized but unissued shares of Common Stock and preferred stock are available for future issuance without shareholder approval, subject to the requirements of applicable law or regulation, including any listing requirement of the principal stock exchange on which our Common Stock is then listed. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of Common Stock and preferred stock could render more difficult or discourage an attempt to obtain control of a majority of our Common Stock by means of a proxy contest, tender offer, merger or otherwise.

Board Authority to Amend Bylaws

Under our amended and restated bylaws, our board of directors has the authority to adopt, amend or repeal the bylaws without the approval of our shareholders unless the Florida Act reserves the power to amend a particular bylaw provision exclusively to the shareholders.

Anti-Takeover Effects of Florida Law

We are subject to certain anti-takeover provisions that apply to public corporations under Florida law. Pursuant to Section 607.0901 of the Florida Act, a publicly held Florida corporation may not engage in a broad range of business combinations or other extraordinary corporate transactions with an “interested shareholder” without the approval of the holders of two-thirds of the voting shares of such corporation (excluding shares held by the interested shareholder), unless:

● the transaction is approved by a majority of disinterested directors before the shareholder becomes an interested shareholder;

● the interested shareholder has owned at least 80% of the corporation’s outstanding voting shares for at least five years preceding the announcement date of any such business combination;

● the interested shareholder is the beneficial owner of at least 90% of the outstanding voting shares of the corporation, exclusive of shares acquired directly from the corporation in a transaction not approved by a majority of the disinterested directors; or

● the consideration paid to the holders of the corporation’s voting stock is at least equal to certain fair price criteria.

An “interested shareholder” is defined as a person who together with affiliates and associates beneficially owns more than 10% of a corporation’s outstanding voting shares. We have not made an election in our amended and restated articles of incorporation to opt out of Section 607.0901.

In addition, we are subject to Section 607.0902 of the Florida Act which prohibits the voting of shares in a publicly held Florida corporation that are acquired in a “control share acquisition” unless (i) our board of directors approved such acquisition prior to its consummation or (ii) after such acquisition, in lieu of prior approval by our board of directors, the holders of a majority of the corporation’s voting shares, exclusive of shares owned by officers of the corporation, employee directors or the acquiring party, approve the granting of voting rights as to the shares acquired in the control share acquisition. A “control share acquisition” is defined as an acquisition that immediately thereafter entitles the acquiring party to 20% or more of the total voting power in an election of directors.

These statutory provisions may prevent takeover attempts that might result in a premium over the market price for shares of our common stock.

Transfer Agent and Registrar

The transfer agent and registrar for the Company's common stock is Continental Stock Transfer & Trust Company.

Exhibit 4.2 Page 2 of 2

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF PETMED EXPRESS, INC.

PetMed Express, Inc. directly owns all of the outstanding interests in the following subsidiaries:

Southeastern Veterinary Exports, Inc., a Florida Corporation

First Image Marketing, Inc., a Florida Corporation

Global Veterinary Supply, Inc., a Florida Corporation

420 South Congress Avenue LLC, a Florida Limited Liability Company

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in these Registration Statements (No. 333-218917, No. 333-145179, No. 333-145180) on Form S-8 and related Reoffer Prospectus of PetMed Express, Inc. of our reports dated May 28, 2019, relating to the consolidated financial statements of PetMed Express, Inc., and the effectiveness of internal control over financial reporting appearing in the Annual Report on Form 10-K of PetMed Express, Inc. for the year ended March 31, 2019.

We also consent to the reference to our firm under the heading “Experts” in such Reoffer Prospectus.

/s/ RSM US LLP

West Palm Beach, Florida

May 28, 2019

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Menderes Akdag, certify that:

1. I have reviewed this Annual Report on Form 10-K of PetMed Express, Inc. for the fiscal year ended March 31, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 28, 2019

By: /s/ Menderes Akdag

Menderes Akdag

Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bruce S. Rosenbloom, certify that:

1. I have reviewed this Annual Report on Form 10-K of PetMed Express, Inc. for the fiscal year ended March 31, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 28, 2019

By: /s/ Bruce S. Rosenbloom

Bruce S. Rosenbloom

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Menderes Akdag, and I, Bruce S. Rosenbloom, each certify to the best of our knowledge, based upon a review of the Annual Report on Form 10-K for the year ended March 31, 2019 (the “Report”) of PetMed Express, Inc. (the “Registrant”), that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: May 28, 2019
By:	/s/ Menderes Akdag
Menderes Akdag
Chief Executive Officer and President
By:	/s/ Bruce S. Rosenbloom
Bruce S. Rosenbloom
Chief Financial Officer

XML

Document And Entity Information - USD ($) $ in Millions	12 Months Ended
	Mar. 31, 2019	May 28, 2019	Sep. 30, 2018
Document Information [Line Items]
Entity Registrant Name	PETMED EXPRESS INC
Entity Central Index Key	0001040130
Trading Symbol	pets
Current Fiscal Year End Date	--03-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding (in shares)		20,223,354
Entity Public Float			$ 656
Entity Shell Company	false
Document Type	10-K
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 31, 2018
Current assets:
Cash and cash equivalents	$ 100,529	$ 77,936
Accounts receivable, less allowance for doubtful accounts of $39 and $35, respectively	2,542	2,292
Inventories - finished goods	21,370	23,337
Prepaid expenses and other current assets	1,408	882
Prepaid income taxes	582	788
Total current assets	126,431	105,235
Noncurrent assets:
Property and equipment, net	27,136	28,741
Intangible assets	860	860
Total noncurrent assets	27,996	29,601
Total assets	154,427	134,836
Current liabilities:
Accounts payable	16,275	15,274
Accrued expenses and other current liabilities	2,351	2,835
Total current liabilities	18,626	18,109
Deferred tax liabilities	1,121	996
Total liabilities	19,747	19,105
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value, 5,000 shares authorized; 3 convertible shares issued and outstanding with a liquidation preference of $4 per share	9	9
Common stock, $.001 par value, 40,000 shares authorized; 20,674 and 20,601 shares issued and outstanding, respectively	21	21
Additional paid-in capital	12,478	9,381
Retained earnings	122,172	106,320
Total shareholders' equity	134,680	115,731
Total liabilities and shareholders' equity	$ 154,427	$ 134,836

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 31, 2018
Allowance for doubtful accounts	$ 39	$ 35
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, liquidation preference (in dollars per share)	$ 4	$ 4
Preferred stock, shares issued (in shares)	3,000	3,000
Preferred stock, shares outstanding (in shares)	3,000	3,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	20,674,000	20,601,000
Common stock, shares outstanding (in shares)	20,674,000	20,601,000

XML

Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Sales	$ 283,419	$ 273,800	$ 249,176
Cost of sales	188,105	175,993	169,862
Gross profit	95,314	97,807	79,314
Operating expenses:
General and administrative	24,767	24,290	22,799
Advertising	22,148	19,255	17,663
Depreciation	2,225	2,126	1,369
Total operating expenses	49,140	45,671	41,831
Income from operations	46,174	52,136	37,483
Other income (expense):
Interest income, net	1,864	658	141
Other, net	1,083	995	300
Total other income	2,947	1,653	441
Income before provision for income taxes	49,121	53,789	37,924
Provision for income taxes	11,381	16,506	14,105
Net income	37,740	37,283	23,819
Comprehensive income	$ 37,740	$ 37,283	$ 23,819
Net income per common share:
Basic (in dollars per share)	$ 1.84	$ 1.83	$ 1.18
Diluted (in dollars per share)	$ 1.84	$ 1.82	$ 1.17
Weighted average number of common shares outstanding:
Basic (in shares)	20,461	20,346	20,232
Diluted (in shares)	20,491	20,433	20,378
Cash dividends declared per common share (in dollars per share)	$ 1.06	$ 0.85	$ 0.76

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Mar. 31, 2016	3	20,447
Balance at Mar. 31, 2016	$ 9	$ 20	$ 4,871	$ 78,295		$ 83,195
Issuance of restricted stock, net (in shares)		79
Issuance of restricted stock, net		$ 1				1
Share based compensation			1,935			1,935
Dividends declared				(15,584)		(15,584)
Net income				23,819	23,819	23,819
Balance (in shares) at Mar. 31, 2017	3	20,526
Balance at Mar. 31, 2017	$ 9	$ 21	6,806	86,530		93,366
Issuance of restricted stock, net (in shares)		75
Issuance of restricted stock, net
Share based compensation			2,575			2,575
Dividends declared				(17,493)		(17,493)
Net income				37,283	37,283	37,283
Balance (in shares) at Mar. 31, 2018	3	20,601
Balance at Mar. 31, 2018	$ 9	$ 21	9,381	106,320		115,731
Issuance of restricted stock, net (in shares)		73
Issuance of restricted stock, net
Share based compensation			3,097			3,097
Dividends declared				(21,888)		(21,888)
Net income				37,740	37,740	37,740
Balance (in shares) at Mar. 31, 2019	3	20,674
Balance at Mar. 31, 2019	$ 9	$ 21	$ 12,478	$ 122,172		$ 134,680

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income	$ 37,740	$ 37,283	$ 23,819
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	2,225	2,126	1,369
Share based compensation	3,097	2,575	1,935
Deferred income taxes	125	(92)	1,951
Bad debt expense	85	112	421
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable	(335)	(596)	(505)
Inventories - finished goods	1,967	(3,109)	5,358
Prepaid income taxes	206	(788)	243
Prepaid expenses and other current assets	(526)	137	1,416
Accounts payable	1,001	53	10,217
Accrued expenses and other current liabilities	(447)	337	321
Income taxes payable		(659)	659
Net cash provided by operating activities	45,138	37,379	47,204
Cash flows from investing activities:
Purchases of property and equipment	(620)	(703)	(10,604)
Net cash used in investing activities	(620)	(703)	(10,604)
Cash flows from financing activities:
Dividends paid	(21,925)	(17,470)	(15,509)
Net cash used in financing activities	(21,925)	(17,470)	(15,509)
Net increase in cash and cash equivalents	22,593	19,206	21,091
Cash and cash equivalents, at beginning of year	77,936	58,730	37,639
Cash and cash equivalents, at end of year	100,529	77,936	58,730
Supplemental disclosure of cash flow information:
Cash paid for income taxes	11,051	18,046	11,373
Dividends payable in accrued expenses	$ 203	$ 240	$ 217

XML

Note 1 - Summary of Significant Accounting Policies

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

( 1 ) Summary of Significant Accounting Policies

Organization

PetMed Express, Inc. and subsidiaries, d/b/a

1

-

800

-PetMeds (the “Company”), is a leading nationwide pet pharmacy. The Company markets prescription and non-prescription pet medications, health products, and supplies for dogs and cats, direct to the consumer. The Company markets its products through national advertising campaigns, which aim to increase the recognition of the

“1

-

800

-PetMeds” brand name and “PetMeds” family of trademarks, increase traffic on its website at

www.1800petmeds.com

, acquire new customers, and maximize repeat purchases. The majority of all of the Company's sales are to residents in the United States. The Company’s corporate headquarters and distribution facility are located in Delray Beach, Florida. The Company's fiscal year end is

March 31,

and references herein to fiscal

2019,

2018,

or

2017

refer to the Company's fiscal years ended

March 31, 2019,

2018,

and

2017,

respectively.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Revenue Recognition

The Company generates revenue by selling pet medication products and pet supplies. Certain pet supplies offered on the Company’s website are drop shipped to customers. The Company considers itself the principal in the arrangement because the Company controls the specified good before it is transferred to the customer. Revenue contracts contain

one

performance obligation, which is delivery of the product; customer care and support is deemed

not

to be a material right to the contract. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are estimated based on historical patterns; however this is

not

considered a key judgment. There are

no

amounts excluded from variable consideration. Revenue is recognized when control transfers to the customer at the point in time in which shipment of the product occurs. This key judgment is determined as the shipping point represents the point in time in which the Company has a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership. Outbound shipping and handling fees are an accounting policy election, and are included in sales as the Company considers itself the principal in the arrangement given responsibility for supplier selection and discretion over pricing. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales.

The Company disaggregates revenue in the following

two

categories: (

1

) reorder revenue vs new order revenue, and (

2

) internet revenue vs contact center revenue. The following table illustrates revenue by various classifications:

Year Ended March 31,
Sales (In thousands)	2019		%			2018		%			$ Variance			% Variance
Reorder Sales	$	241,780		85.3	%	$	227,513		83.1	%	$	14,267			6.3	%
New Order Sales	$	41,639		14.7	%	$	46,287		16.9	%	$	(4,648	)		-10.0	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%
Internet Sales	$	240,034		84.7	%	$	230,319		84.1	%	$	9,715			4.2	%
Contact Center Sales	$	43,385		15.3	%	$	43,481		15.9	%	$	(96	)		-0.2	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%

Year Ended March 31,
Sales (In thousands)	2018		%			2017		%			$ Variance			% Variance
Reorder Sales	$	227,513		83.1	%	$	206,299		82.8	%	$	21,214			10.3	%
New Order Sales	$	46,287		16.9	%	$	42,877		17.2	%	$	3,410			8.0	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%
Internet Sales	$	230,319		84.1	%	$	205,643		82.5	%	$	24,676			12.0	%
Contact Center Sales	$	43,481		15.9	%	$	43,533		17.5	%	$	(52	)		-0.1	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%

The majority of the Company’s sales are paid by credit cards and the Company usually receives the cash settlement in

two

to

three

banking days. Credit card sales minimize accounts receivable balances relative to sales. The Company had

no

material contract asset or liability balances as of

March 31, 2019

and

2018.

The Company maintains an allowance for doubtful accounts for losses that the Company estimates will arise from customers’ inability to make required payments, arising from either credit card charge-backs or insufficient funds checks. The Company determines its estimates of the uncollectibility of accounts receivable by analyzing historical bad debts and current economic trends. The allowance for doubtful accounts was approximately

$39,000

at

March 31, 2019

compared to

$35,000

at

March 31, 2018.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturity of

three

months or less when purchased to be cash equivalents. Cash and cash equivalents at

March 31, 2019

and

2018

consisted of the Company’s cash accounts and money market accounts with a maturity of

three

months or less. The carrying amount of cash equivalents approximates fair value. The Company maintains its cash in bank deposit accounts which, at times,

may

exceed federally insured limits. The Company has

not

experienced any losses in such accounts.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Inventories

Inventories consist of prescription and non-prescription pet medications and pet supplies that are available for sale and are priced at the lower of cost or net realizable value using a weighted average cost method. The Company writes down its inventory for estimated obsolescence. The inventory reserve was approximately

$54,000

and

$58,000

at

March 31, 2019

and

2018,

respectively.

Property and Equipment

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Our building is being depreciated over a period of

thirty

years. The furniture, fixtures, equipment, and computer software are being depreciated over periods ranging from

three

to

ten

years.

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount

may

not

be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the asset to the undiscounted cash flows expected to be generated from the asset.

Intangible Assets

The intangible assets consist of a toll-free telephone number and an internet domain name. In accordance with the ASC Topic

350

(“

Goodwill and Other Intangible Assets”

) the intangible assets are

not

being amortized, and are subject to an annual review for impairment.

Fair Value of Financial Instruments

The carrying amounts of the Company's cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments.

Advertising

The Company's advertising expense consists primarily of Internet marketing, direct mail/print, and television advertising. Internet costs are expensed in the month incurred and direct mail/print advertising costs are expensed when the related catalogs, brochures, and postcards are produced, distributed, or superseded. Television advertising costs are expensed as the advertisements are televised.

Comprehensive Income

The Company applies ASC Topic

220

(“

Reporting Comprehensive Income”

) which requires that all items that are recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The items of other comprehensive income that are typically required to be displayed are foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. For the fiscal years ended

March 31, 2019,

2018

and

2017

the Company had

no

unrealized gains or losses.

Income Taxes

The Company accounts for income taxes under the provisions of ASC Topic

740

(“

Accounting for Income Taxes

”) which generally requires the recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting carrying values and the tax bases of assets and liabilities, and are measured by applying enacted tax rates and laws for the taxable years in which those differences are expected to reverse. As required by “Accounting for Uncertainty in Income Taxes” guidance, which clarifies ASC Topic

740,

the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than

not

sustain the position following an audit. For tax positions meeting the more-likely-than-

not

threshold, the amount recognized in the Consolidated Financial Statements is the largest benefit that has a greater than

50

percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company applies “Accounting for Uncertainty in Income Taxes” guidance to all tax positions for which the statute of limitations remains open. The Company files tax returns in the U.S. federal jurisdiction and Florida and Virginia.  With few exceptions, the Company is

no

longer subject to U.S. federal, state or local income tax examinations by tax authorities for years ending

March 31, 2013,

or earlier. Any interest and penalties related to income taxes will be recorded to other income (expenses).

Business Concentrations

The Company purchases its products from a variety of sources, including certain manufacturers, domestic distributors, and wholesalers. We have multiple suppliers for each of our products to obtain the lowest cost. There were

four

suppliers from whom we purchased approximately

50%

of all products in both fiscal

2019

and fiscal

2018.

Accounting for Share Based Compensation

The Company records compensation expense associated with restricted stock in accordance with ASC Topic

718

(

“Share Based Payment”

). The compensation expense related to all of the Company’s stock-based compensation arrangements is recorded as a component of general and administrative expenses.

Recent Accounting Pronouncements

In

February 2016,

the FASB issued guidance on leases which supersedes the current lease guidance. The core principle requires lessees to recognize the assets and liabilities that arise from nearly all leases in the statement of financial position. Accounting applied by lessors will remain largely consistent with previous guidance, additional changes set to align lessor accounting with the revised lessee model and the FASB’s revenue recognition guidance. The amendments are effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this standard on

April 1, 2019.

The Company has very few lease arrangements. We do

not

expect the standard to have a material impact on our consolidated financial statements.

The Company does

not

believe that any other recently issued, but

not

yet effective, accounting standards, if currently adopted, will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

XML

Note 2 - Property and Equipment

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

( 2 ) Property and Equipment

Major classifications of property and equipment consist of the following (in thousands):

	March 31,
	2019			2018
Building	$	14,997		$	14,997
Land		3,700			3,700
Building Improvements		2,817			2,807
Computer Software		5,891			5,504
Furniture, fixtures and equipment		8,128			7,906
		35,533			34,914
Less: accumulated depreciation		(8,397	)		(6,173	)
Property and equipment, net	$	27,136		$	28,741

XML

Note 3 - Valuation and Qualifying Accounts

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

SEC Schedule, 12-09, Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]

( 3 ) Valuation and Qualifying Accounts

Activity in the Company's valuation and qualifying accounts consists of the following (in thousands):

	Year Ended March 31,
	2019			2018			2017
Allowance for doubtful accounts:
Balance at beginning of period	$	35		$	27		$	13
Provision for doubtful accounts		85			112			421
Write-off of uncollectible accounts receivable		(81	)		(104	)		(407	)
Balance at end of year	$	39		$	35		$	27

XML

Note 4 - Accrued Expenses and Other Current Liabilities

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

( 4 ) Accrued Expenses and Other Current Liabilities

Major classifications of accrued expenses and other current liabilities consist of the following (in thousands):

	March 31,
	2019		2018
Accrued sales tax	$	323	$	449
Accrued credit card fees		404		381
Accrued salaries and benefits		685		966
Accrued professional expenses		281		320
Accrued sales return allowance		184		191
Accrued dividends payable		203		240
Accrued real estate taxes		87		87
Other accrued liabilities		184		201
Accrued expenses and other current liabilities	$	2,351	$	2,835

XML

Note 5 - Income Taxes

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

( 5 ) Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows (in thousands):

	March 31,
	2019			2018
Deferred tax assets:
Accrued expenses	$	298		$	346
Deferred stock compensation		412			353
Bad debt and inventory reserves		22			22
Total deferred tax assets		732			721
Deferred tax liabilities:
Property and equipment		1,853			1,717
Total net deferred taxes	$	(1,121	)	$	(996	)

At

March 31, 2019,

the Company had

no

federal net operating loss carryforwards.

The components of the income tax provision consist of the following (in thousands):

	Year Ended March 31,
	2019		2018			2017
Current taxes
Federal	$	9,718	$	15,012		$	11,095
State		1,538		1,586			1,059
Total current taxes		11,256		16,598			12,154
Deferred taxes
Federal		108		(83	)		1,781
State		17		(9	)		170
Total deferred taxes		125		(92	)		1,951
Total provision for income taxes	$	11,381	$	16,506		$	14,105

The reconciliation of income tax provision computed at the U.S. federal statutory tax rates to income tax expense is as follows (in thousands):

	Year Ended March 31,
	2019			2018			2017
Income taxes at U.S. statutory rates	$	10,315		$	16,943		$	13,274
State income taxes, net of federal tax benefit		1,233			1,078			858
Restricted stock windfall adjustment		(176	)		(1,086	)		-
Reduction of deferred tax liability due to rate reduction		-			(430	)		-
Other		9			1			(27	)
Total provision for income taxes	$	11,381		$	16,506		$	14,105

The

2017

Tax Cuts and Jobs Act (the

“2017

Tax Act”) was signed into law on

December 22, 2017.  

The

2017

Tax Act made a significant number of changes to the existing U.S. Internal Revenue Code, including a permanent reduction of the U.S. corporate income tax rate from

35%

to

21%

for tax years beginning after

December 31, 2017.

In accordance with SEC Staff Bulletin

No.

118,

fiscal year end companies were required to determine the appropriate blended rate to apply based on their respective fiscal year end dates. Therefore, instead of applying a

35.0%

federal tax rate for the fiscal year ended

March 31, 2018,

the Company applied a blended federal rate of

31.5%.

This blended rate was applied to fiscal

2018,

resulting in a tax benefit of approximately

$1.9

million. As a result, the Company recorded a provisional income tax benefit of approximately

$430,000

related to the re-measurement of deferred tax assets and liabilities resulting from the reduction of the federal corporate tax rate.  In fiscal

2019

the Company recognized a stock compensation windfall benefit of approximately

$176,000,

and recognized a

one

-time charge of approximately

$8,000

related to a return to provision true up of the fiscal

2018

income tax provision. In fiscal

2018

the Company also recognized a stock compensation windfall benefit of approximately

$1.1

million, and recognized a

one

-time net benefit of approximately

$150,000

related to a return to provision true up of the fiscal

2017

income tax provision.

XML

Note 6 - Shareholders' Equity

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

( 6 ) Shareholders’ Equity

Preferred Stock

In

April 1998,

the Company issued

250,000

shares of its

$.001

par value preferred stock at a price of

$4.00

per share, less issuance costs of

$112,187.

Each share of the preferred stock is convertible into approximately

4.05

shares of common stock at the election of the shareholder. The shares have a liquidation value of

$4.00

per share and

may

pay dividends at the sole discretion of the Company. The Company does

not

anticipate paying dividends to the preferred shareholders in the foreseeable future. Each share of preferred stock is entitled to

one

vote on all matters submitted to a vote of shareholders of the Company. At

March 31, 2019

and

2018,

2,500

shares of the convertible preferred stock remained unconverted and outstanding.

Share Repurchase Plan

On

November 8, 2006,

the Company's Board of Directors approved a share repurchase plan of up to

$20.0

million. On

October 31, 2008,

November 1, 2010,

and

August 1, 2011,

the Company’s Board of Directors approved an increase under the repurchase plan each for an additional

$20.0

million. On

January 25, 2019

the Company’s Board of Directors authorized an additional

$30.0

million under the repurchase plan. The repurchase plan is intended to be implemented through purchases made from time to time in either the open market or through private transactions at the Company's discretion, subject to market conditions and other factors, in accordance with Securities and Exchange Commission requirements.

There can be

no

assurances as to the precise number of shares that will be repurchased under the share repurchase plan, and the Company

may

discontinue the share repurchase plan at any time subject to compliance with applicable regulatory requirements. Shares purchased pursuant to the share repurchase plan will either be cancelled or held in the Company's treasury. During both fiscal

2019

and

2018

the Company had

no

share repurchases. At

March 31, 2019

the Company had approximately

$40.2

million remaining under the Company’s share repurchase plan.

Dividends

On

May 8, 2017

the Company’s Board of Directors increased the quarterly dividend to

$0.20

per share, then on

January 22, 2018

the Company’s Board of Directors increased the quarterly dividend to

$0.25

per share, and then on

July 23, 2018

the Company’s Board of Directors increased the quarterly dividend to

$0.27

per share, on its common stock. The Company intends to continue to pay regular quarterly dividends; however the declaration and payment of future dividends is discretionary and will be subject to a determination by the Board of Directors each quarter following its review of the Company’s financial performance.

During fiscal

2019,

our Board of Directors declared the following dividends:

Declaration Date	Per Share Dividend		Record Date	Total Amount (In thousands)		Payment Date
May 7, 2018	$	0.25	May 18, 2018	$	5,150	May 25, 2018
July 23, 2018	$	0.27	August 3, 2018	$	5,584	August 10, 2018
October 22, 2018	$	0.27	November 5, 2018	$	5,582	November 16, 2018
January 21, 2019	$	0.27	February 4, 2019	$	5,582	February 15, 2019

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Note 7 - Net Income Per Share

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

( 7 ) Net Income Per Share

In accordance with the provisions of ASC Topic

260

(“

Earnings Per Share

”) basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per common share includes the dilutive effect of potential restricted stock and the effects of the potential conversion of preferred shares, calculated using the treasury stock method. Unvested restricted stock, and convertible preferred shares issued by the Company represent the only dilutive effect reflected in diluted weighted average shares outstanding. The following is a reconciliation of the numerators and denominators of the basic and diluted net income per share computations for the periods presented (in thousands, except for per share amounts):

	Year Ended March 31,
	2019		2018		2017
Net income (numerator):
Net income	$	37,740	$	37,283	$	23,819
Shares (denominator)
Weighted average number of common shares outstanding used in basic computation		20,461		20,346		20,232
Common shares issuable upon the vesting of restricted stock		20		77		136
Common shares issuable upon conversion of preferred shares		10		10		10
Shares used in diluted computation		20,491		20,433		20,378
Net income per common share:
Basic	$	1.84	$	1.83	$	1.18
Diluted	$	1.84	$	1.82	$	1.17

At

March 31, 2019

and

2018,

150,017

and

77,350

shares of common restricted stock, respectively, were excluded from the computations of diluted net income per common share, as their inclusion would have had an anti-dilutive effect on diluted net income per common share. At

March 31, 2017,

all restricted stock was included in the diluted net income per common share computation.

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Note 8 - Restricted Stock

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

( 8 ) Restricted Stock

On

July 28, 2006,

the Company received shareholder approval for the adoption of the

2006

Employee Equity Compensation Restricted Stock Plan (the

“2006

Employee Plan”) and the

2006

Outside Director Equity Compensation Restricted Stock Plan (the

“2006

Director Plan”). The purpose of the plans was to promote the interests of the Company by securing and retaining both employees and outside directors. The Company had reserved

1.0

million shares of common stock for issuance under the Employee Plan, and

200,000

shares of common stock for issuance under the Director Plan. In

July 2012,

the Company received shareholder approval to ratify the amendment to the Company’s Director Plan passed by the Board of Directors to increase the number of shares available for issuance under the Director Plan from

200,000

to

400,000.

Additionally, the Company received shareholder approval to ratify the amendment passed by the Board of Directors to provide for a

10%

automatic increase every year in the amount of shares available for issuance under both of the plans.

In

July 2015,

the Company’s

2015

Outside Director Equity Compensation Restricted Stock Plan (

“2015

Director Plan”) became effective upon the approval of the plan by the Company’s Shareholders. The

2015

Director Plan authorizes

400,000

shares of the Company's common stock available for issuance under the plan, and provides for an automatic increase every year in the amount of shares available for issuance under the plan of

10%

of the shares authorized under the plan. In

July 2016,

the Company’s

2016

Employee Equity Compensation Restricted Stock Plan (

“2016

Employee Plan”) became effective upon the approval of the plan by the Company’s Shareholders. The

2016

Employee Plan authorizes

1,000,000

shares of the Company's Common stock available for issuance under the plan. The value of the restricted stock is determined based on the market value of the stock at the issuance date. The restriction period or forfeiture period is determined by the Company’s Board and is to be

no

less than

1

year and

no

more than

ten

years.

At

March 31, 2019,

the Company had

972,175

restricted common shares issued under the

2006

Employee Plan,

85,183

restricted common shares issued under the

2016

Employee Plan,

272,000

restricted common shares issued under the

2006

Director Plan, and

97,500

restricted common shares issued under the

2015

Director Plan. All shares were issued subject to a restriction or forfeiture period which lapses ratably on the first, second, and

third

anniversaries of the date of grant, and the fair value of which is being amortized over the

three

-year restriction period. For the fiscal years ended

March 31, 2019,

2018,

and

2017,

the Company recognized compensation expense related to the Employee and Director Plans of

$3.1

million,

$2.6

million, and

$1.9

million, respectively. A summary of the Company’s non-vested restricted stock at

March 31, 2019

is as follows:

	Employee Plan Number of Shares (In thousands)			Director Plan Number of Shares (In thousands)			Both Plans Number of Shares (In thousands)
Non-vested restricted stock outstanding at March 31, 2018		133			60			193
Restricted stock granted		47			38			85
Restricted stock vested		(86	)		(30	)		(116	)
Restricted stock forfeited or expired		(12	)		-			(12	)
Non-vested restricted stock outstanding at March 31, 2019		82			68			150

At

March 31, 2019

and

2018,

there were

150,017

and

192,968,

non-vested restricted stock shares outstanding, respectively. During the fiscal years ended

March 31, 2019

and

2018,

the Company issued, net of forfeitures,

72,899

and

75,081

restricted shares, respectively. At

March 31, 2019

and

2018,

there were

$3.9

million and

$4.4

million of unrecognized compensation cost related to the non-vested restricted stock awards, respectively, which is expected to be recognized over the remaining weighted average vesting period of

1.7

years and

1.5

years for fiscal

2019

and

2018,

respectively.

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Note 9 - Fair Value Measurements

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

( 9 ) Fair Value Measurements

The Company carries cash and cash equivalents and investments at fair value in the Consolidated Balance Sheets. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. ASC Topic

820

(“Fair Value Measurements”) establishes a

three

-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 

1

- Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 

2

- Include other inputs that are directly or indirectly observable in the marketplace.

Level 

3

- Unobservable inputs which are supported by little or

no

market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s cash equivalents are classified within Level

1.

At

March 31, 2019

and

2018

the Company had invested the majority of its cash and cash equivalents balance in money market funds (level

1

).

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Note 10 - Commitments and Contingencies

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

( 10 ) Commitments and Contingencies

Legal Matters and Routine Proceedings

The Company is a defendant in a putative class action lawsuit, filed in

May 2019,

in the United States District Court for the Southern District of New York seeking injunctive and monetary relief styled Valentin Reid, on behalf of himself and all others similarly situated v. PetMed Express, Inc., Case

No.

19

-cv-

4169,

alleging that the Company’s website,

www.1800petmeds.com,

does

not

comply with the Americans with Disabilities Act (“ADA”), New York State Human Rights Law (“NYSHRL”), and New York City Human Rights Law (“NYCHRL”), and discriminates against visually impaired individuals. The Company denies any wrongdoing and intends to vigorously defend itself against such allegations. At this stage, the company can neither accurately predict the likelihood of an unfavorable or adverse outcome nor provide an estimate of the amount or range of potential loss, if any.

In

January 2019,

a putative class action complaint was filed by a different individual in the United States District Court for the Southern District of New York alleging that company’s website,

www.1800petmeds.com,

does

not

comply with the ADA, NYSHRL, and NYCHRL, and discriminates against visually impaired individuals. The Plaintiff named a New York corporation named Pet Meds Inc., which is

not

related or affiliated with the Company, as the defendant. However, the Plaintiff has sought to remedy that error by requesting leave to file an amended complaint naming the Company, which request the Court granted on

April 9, 2019.

On

April 18, 2019,

the Court granted the Plaintiff’s request to transfer the case to the United States District Court for the Eastern District of New York, where it is currently pending. The matter is styled Brian Fischler, individually and on behalf of all other persons similarly situated v. PetMed Express, Inc.; Case

No.

19

-cv-

02391.

The Company denies any wrongdoing and it intends to vigorously defend itself against such allegations. At this early juncture, the Company can neither accurately predict the likelihood of an unfavorable or adverse outcome nor provide an estimate of the amount or range of potential loss, if any.

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.

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

for the fiscal years ended

March 31, 2017.

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, 2019,

the leases with these

two

tenants had a remaining weighted average lease term of

4.5

years. The Company recorded approximately

$622,000

and

$604,000

in rental revenue in fiscal

2019

and

2018,

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

five

years:

$645,000

in fiscal

2020;

$378,000

in fiscal

2021;

$289,000

in fiscal

2022;

$298,000

in fiscal

2023;

and

$307,000

in fiscal

2024.

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. Based on the recommendation of the Compensation Committee of the Board of Directors (“Committee”) and the approval of the Board of Directors (“Board”), the Company amended the existing Executive Employment Agreement of Menderes Akdag, the Company’s President and Chief Executive Officer. On

March 15, 2019, 

Amendment

No.

5a

to the Executive Employment Agreement was entered into with Mr. Akdag (“Agreement”). Mr. Akdag’s Executive Employment Agreement was set to expire on

March 16, 2019

pursuant to Amendment

No.

5

to the Executive Employment Agreement. With the intent to enter into amendment

No.

6

to the Executive Employment Agreement, the Committee had been working with a nationally recognized compensation consulting firm to ensure executive pay to the Chief Executive Officer of the Company is consistent with a selected peer group and contains appropriate performance benchmarks. At the time of entering into the Agreement, the report from the compensation consulting firm had been received and analyzed, and the Chairman of the Board had presented the results to and was negotiating with the Chief Executive Officer to agree to final terms that would be acceptable to all parties, subject to final Board approval. The Agreement amends certain provisions of the Executive Employment Agreement as follows: the term of the Executive Employment Agreement was extended until

May 13, 2019,

commencing on

March 16, 2019;

and Mr. Akdag’s salary remained at

$600,000

per year throughout the term of the Agreement. See also note

12,

subsequent events.

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Note 11 - Employee Benefit Plan

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

( 11 ) Employee Benefit Plan

The Company maintains a

401

(k) Savings Plan for eligible employees.  The plan is a defined contribution plan that is administered by the Company. All regular, full-time employees are eligible for voluntary participation upon completing

one

year of service and having attained the age of

21.

 The plan provides for growth in savings through contributions and income from investments.  It is subject to the provisions of the Employee Retirement Income Security Act of

1974,

as amended. Plan participants are allowed to contribute a specified percentage of their base salary. In

2006,

the Company approved a matching contribution which is funded subsequent to the calendar year. During the fiscal years ended

March 

31,

2019,

2018,

and

2017,

the Company charged

$192,000,

$166,000,

and

$181,000,

respectively, of

401

(k) matching contribution and administration expense to general and administrative expenses.

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Note 12 - Subsequent Events

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

( 12 ) Subsequent Events

On

May 6, 2019,

the Company’s Board of Directors declared a quarterly dividend of

$0.27

per share on its common stock. The

$5.6

million dividend was paid on

May 24, 2019,

to shareholders of record at the close of business on

May 17, 2019.

Based on the recommendation of the Compensation Committee of the Board of Directors (Committee) and the approval of the Board of Directors (“Board”), the Company amended the existing Executive Employment Agreement of Menderes Akdag, the Company’s President and Chief Executive Officer. On

May 13, 2019,

Amendment

No.

6

to the Executive Employment Agreement was entered into with Mr. Akdag (“Agreement”). Mr. Akdag’s Agreement was set to expire on

May 13, 2019

pursuant to Amendment

No.

5a

to the Agreement. The Committee worked with a nationally recognized compensation consulting firm to ensure executive pay to the Chief Executive Officer of the Company was consistent with a selected peer group and contained appropriate performance bench marks.

The Agreement amends certain provisions of the Executive Employment Agreement as follows: the term of the Executive Employment Agreement is extended until the earlier of (i) the date of the Company’s

2020

Annual Stockholders Meeting, or (ii)

August 1, 2020;

and Mr. Akdag’s salary will remain

$600,000

per year throughout the term of the Agreement subject to a percentage increase adjustment, if any, commencing on the pay period ending on

May 17, 2019,

based on pre-determined individual and corporate performance goals and objectives for fiscal

2019

approved by the Board.

According to the Agreement, on

July 26, 2019

Mr. Akdag will also be granted

40,000

restricted shares of the Company’s common stock to vest on

July 26, 2020,

and the Company will pay Mr. Akdag an additional amount (“Gross-Up Payment”) to cover Mr. Akdag’s withholding taxes which are required to be paid as a result of the issuance of the restricted shares. The Gross-Up Payment method used to determine Mr. Akdag’s withholding amount will be the same method the Company currently utilizes for the gross-up payment calculation for other employees of the Company as approved by the Board of Directors, which currently is approved for up to

28.2%

(based on the current IRS withholding guidelines according to IRS guidelines of

22%

) for employees. Future issuances of restricted shares will be based on pre-determined individual and corporate performance goals and objectives approved by the Board.

In addition, as compensation for an approximate

four

month delay from the expiration date of Amendment

5

to the Executive Employment Agreement to

July 26, 2019,

in addition to Mr. Akdag receiving a salary in accordance with his previous annual rate of

$600,000,

Mr. Akdag will also receive a

one

-time payment of

$10,800

in full satisfaction of any lost amounts in earned dividends for restricted shares that would have been issued to Mr. Akdag on

March 16, 2019

in connection with his compensation following the expiration date of Amendment

5

to the Executive Employment Agreement.

The Agreement also provides that in the event that a Change in Control (as defined in the Executive Employment Agreement) of the Company shall occur at any time, Mr. Akdag shall have the right to terminate his employment under the Executive Employment Agreement upon

thirty

(

30

) days written notice given at any time within

one

(

1

) year after the occurrence of such event, and upon such termination, Mr. Akdag shall be entitled to a

one

-time payment of

two

times his salary as of the date of such termination.

Subsequent to

March 31, 2019,

the Company repurchased approximately

450,000

of its own shares for approximately

$8.6

million, averaging approximately

$19.08

per share.

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Note 13 - Quarterly Financial Data (Unaudited)

12 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Quarterly Financial Information [Text Block]

( 13 ) Quarterly Financial Data (Unaudited)

Summarized unaudited quarterly financial data for fiscal

2019

and

2018

is as follows (in thousands, except for per share amounts):

Quarter Ended:	June 30, 2018		September 30, 2018		December 31, 2018		March 31, 2019
Sales	$	87,390	$	71,396	$	60,068	$	64,565
Gross Profit	$	29,954	$	25,255	$	19,381	$	20,724
Income from operations	$	15,757	$	13,203	$	9,413	$	7,802
Net income	$	12,582	$	10,752	$	7,787	$	6,620
Diluted net income per common share	$	0.62	$	0.52	$	0.38	$	0.32

Quarter Ended:	June 30, 2017		September 30, 2017		December 31, 2017		March 31, 2018
Sales	$	79,657	$	66,711	$	60,110	$	67,322
Gross Profit	$	27,465	$	23,479	$	21,944	$	24,919
Income from operations	$	14,416	$	12,248	$	11,468	$	14,004
Net income	$	9,276	$	8,760	$	9,064	$	10,183
Diluted net income per common share	$	0.45	$	0.43	$	0.44	$	0.50

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Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

The Company generates revenue by selling pet medication products and pet supplies. Certain pet supplies offered on the Company’s website are drop shipped to customers. The Company considers itself the principal in the arrangement because the Company controls the specified good before it is transferred to the customer. Revenue contracts contain

one

performance obligation, which is delivery of the product; customer care and support is deemed

not

to be a material right to the contract. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are estimated based on historical patterns; however this is

not

considered a key judgment. There are

no

amounts excluded from variable consideration. Revenue is recognized when control transfers to the customer at the point in time in which shipment of the product occurs. This key judgment is determined as the shipping point represents the point in time in which the Company has a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership. Outbound shipping and handling fees are an accounting policy election, and are included in sales as the Company considers itself the principal in the arrangement given responsibility for supplier selection and discretion over pricing. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales.

The Company disaggregates revenue in the following

two

categories: (

1

) reorder revenue vs new order revenue, and (

2

) internet revenue vs contact center revenue. The following table illustrates revenue by various classifications:

Year Ended March 31,
Sales (In thousands)	2019		%			2018		%			$ Variance			% Variance
Reorder Sales	$	241,780		85.3	%	$	227,513		83.1	%	$	14,267			6.3	%
New Order Sales	$	41,639		14.7	%	$	46,287		16.9	%	$	(4,648	)		-10.0	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%
Internet Sales	$	240,034		84.7	%	$	230,319		84.1	%	$	9,715			4.2	%
Contact Center Sales	$	43,385		15.3	%	$	43,481		15.9	%	$	(96	)		-0.2	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%

Year Ended March 31,
Sales (In thousands)	2018		%			2017		%			$ Variance			% Variance
Reorder Sales	$	227,513		83.1	%	$	206,299		82.8	%	$	21,214			10.3	%
New Order Sales	$	46,287		16.9	%	$	42,877		17.2	%	$	3,410			8.0	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%
Internet Sales	$	230,319		84.1	%	$	205,643		82.5	%	$	24,676			12.0	%
Contact Center Sales	$	43,481		15.9	%	$	43,533		17.5	%	$	(52	)		-0.1	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%

The majority of the Company’s sales are paid by credit cards and the Company usually receives the cash settlement in

two

to

three

banking days. Credit card sales minimize accounts receivable balances relative to sales. The Company had

no

material contract asset or liability balances as of

March 31, 2019

and

2018.

The Company maintains an allowance for doubtful accounts for losses that the Company estimates will arise from customers’ inability to make required payments, arising from either credit card charge-backs or insufficient funds checks. The Company determines its estimates of the uncollectibility of accounts receivable by analyzing historical bad debts and current economic trends. The allowance for doubtful accounts was approximately

$39,000

at

March 31, 2019

compared to

$35,000

at

March 31, 2018.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturity of

three

months or less when purchased to be cash equivalents. Cash and cash equivalents at

March 31, 2019

and

2018

consisted of the Company’s cash accounts and money market accounts with a maturity of

three

months or less. The carrying amount of cash equivalents approximates fair value. The Company maintains its cash in bank deposit accounts which, at times,

may

exceed federally insured limits. The Company has

not

experienced any losses in such accounts.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Inventory, Policy [Policy Text Block]

Inventories

Inventories consist of prescription and non-prescription pet medications and pet supplies that are available for sale and are priced at the lower of cost or net realizable value using a weighted average cost method. The Company writes down its inventory for estimated obsolescence. The inventory reserve was approximately

$54,000

and

$58,000

at

March 31, 2019

and

2018,

respectively.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Our building is being depreciated over a period of

thirty

years. The furniture, fixtures, equipment, and computer software are being depreciated over periods ranging from

three

to

ten

years.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount

may

not

be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the asset to the undiscounted cash flows expected to be generated from the asset.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Intangible Assets

The intangible assets consist of a toll-free telephone number and an internet domain name. In accordance with the ASC Topic

350

(“

Goodwill and Other Intangible Assets”

) the intangible assets are

not

being amortized, and are subject to an annual review for impairment.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The carrying amounts of the Company's cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments.

Advertising Cost [Policy Text Block]

Advertising

The Company's advertising expense consists primarily of Internet marketing, direct mail/print, and television advertising. Internet costs are expensed in the month incurred and direct mail/print advertising costs are expensed when the related catalogs, brochures, and postcards are produced, distributed, or superseded. Television advertising costs are expensed as the advertisements are televised.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income

The Company applies ASC Topic

220

(“

Reporting Comprehensive Income”

) which requires that all items that are recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The items of other comprehensive income that are typically required to be displayed are foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. For the fiscal years ended

March 31, 2019,

2018

and

2017

the Company had

no

unrealized gains or losses.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes under the provisions of ASC Topic

740

(“

Accounting for Income Taxes

”) which generally requires the recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting carrying values and the tax bases of assets and liabilities, and are measured by applying enacted tax rates and laws for the taxable years in which those differences are expected to reverse. As required by “Accounting for Uncertainty in Income Taxes” guidance, which clarifies ASC Topic

740,

the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than

not

sustain the position following an audit. For tax positions meeting the more-likely-than-

not

threshold, the amount recognized in the Consolidated Financial Statements is the largest benefit that has a greater than

50

percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company applies “Accounting for Uncertainty in Income Taxes” guidance to all tax positions for which the statute of limitations remains open. The Company files tax returns in the U.S. federal jurisdiction and Florida and Virginia.  With few exceptions, the Company is

no

longer subject to U.S. federal, state or local income tax examinations by tax authorities for years ending

March 31, 2013,

or earlier. Any interest and penalties related to income taxes will be recorded to other income (expenses).

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Business Concentrations

The Company purchases its products from a variety of sources, including certain manufacturers, domestic distributors, and wholesalers. We have multiple suppliers for each of our products to obtain the lowest cost. There were

four

suppliers from whom we purchased approximately

50%

of all products in both fiscal

2019

and fiscal

2018.

Compensation Related Costs, Policy [Policy Text Block]

Accounting for Share Based Compensation

The Company records compensation expense associated with restricted stock in accordance with ASC Topic

718

(

“Share Based Payment”

). The compensation expense related to all of the Company’s stock-based compensation arrangements is recorded as a component of general and administrative expenses.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

February 2016,

the FASB issued guidance on leases which supersedes the current lease guidance. The core principle requires lessees to recognize the assets and liabilities that arise from nearly all leases in the statement of financial position. Accounting applied by lessors will remain largely consistent with previous guidance, additional changes set to align lessor accounting with the revised lessee model and the FASB’s revenue recognition guidance. The amendments are effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this standard on

April 1, 2019.

The Company has very few lease arrangements. We do

not

expect the standard to have a material impact on our consolidated financial statements.

The Company does

not

believe that any other recently issued, but

not

yet effective, accounting standards, if currently adopted, will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

XML

Note 1 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Mar. 31, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

Year Ended March 31,
Sales (In thousands)	2019		%			2018		%			$ Variance			% Variance
Reorder Sales	$	241,780		85.3	%	$	227,513		83.1	%	$	14,267			6.3	%
New Order Sales	$	41,639		14.7	%	$	46,287		16.9	%	$	(4,648	)		-10.0	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%
Internet Sales	$	240,034		84.7	%	$	230,319		84.1	%	$	9,715			4.2	%
Contact Center Sales	$	43,385		15.3	%	$	43,481		15.9	%	$	(96	)		-0.2	%
Total Net Sales	$	283,419		100.0	%	$	273,800		100.0	%	$	9,619			3.5	%

Year Ended March 31,
Sales (In thousands)	2018		%			2017		%			$ Variance			% Variance
Reorder Sales	$	227,513		83.1	%	$	206,299		82.8	%	$	21,214			10.3	%
New Order Sales	$	46,287		16.9	%	$	42,877		17.2	%	$	3,410			8.0	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%
Internet Sales	$	230,319		84.1	%	$	205,643		82.5	%	$	24,676			12.0	%
Contact Center Sales	$	43,481		15.9	%	$	43,533		17.5	%	$	(52	)		-0.1	%
Total Net Sales	$	273,800		100.0	%	$	249,176		100.0	%	$	24,624			9.9	%

XML

Note 2 - Property and Equipment (Tables)

12 Months Ended

Mar. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	March 31,
	2019			2018
Building	$	14,997		$	14,997
Land		3,700			3,700
Building Improvements		2,817			2,807
Computer Software		5,891			5,504
Furniture, fixtures and equipment		8,128			7,906
		35,533			34,914
Less: accumulated depreciation		(8,397	)		(6,173	)
Property and equipment, net	$	27,136		$	28,741

XML

Note 3 - Valuation and Qualifying Accounts (Tables)

12 Months Ended

Mar. 31, 2019

Notes Tables

Valuation and Qualifying Accounts [Table Text Block]

	Year Ended March 31,
	2019			2018			2017
Allowance for doubtful accounts:
Balance at beginning of period	$	35		$	27		$	13
Provision for doubtful accounts		85			112			421
Write-off of uncollectible accounts receivable		(81	)		(104	)		(407	)
Balance at end of year	$	39		$	35		$	27

XML

Note 4 - Accrued Expenses and Other Current Liabilities (Tables)

12 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	March 31,
	2019		2018
Accrued sales tax	$	323	$	449
Accrued credit card fees		404		381
Accrued salaries and benefits		685		966
Accrued professional expenses		281		320
Accrued sales return allowance		184		191
Accrued dividends payable		203		240
Accrued real estate taxes		87		87
Other accrued liabilities		184		201
Accrued expenses and other current liabilities	$	2,351	$	2,835

XML

Note 5 - Income Taxes (Tables)

12 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	March 31,
	2019			2018
Deferred tax assets:
Accrued expenses	$	298		$	346
Deferred stock compensation		412			353
Bad debt and inventory reserves		22			22
Total deferred tax assets		732			721
Deferred tax liabilities:
Property and equipment		1,853			1,717
Total net deferred taxes	$	(1,121	)	$	(996	)

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	Year Ended March 31,
	2019		2018			2017
Current taxes
Federal	$	9,718	$	15,012		$	11,095
State		1,538		1,586			1,059
Total current taxes		11,256		16,598			12,154
Deferred taxes
Federal		108		(83	)		1,781
State		17		(9	)		170
Total deferred taxes		125		(92	)		1,951
Total provision for income taxes	$	11,381	$	16,506		$	14,105

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	Year Ended March 31,
	2019			2018			2017
Income taxes at U.S. statutory rates	$	10,315		$	16,943		$	13,274
State income taxes, net of federal tax benefit		1,233			1,078			858
Restricted stock windfall adjustment		(176	)		(1,086	)		-
Reduction of deferred tax liability due to rate reduction		-			(430	)		-
Other		9			1			(27	)
Total provision for income taxes	$	11,381		$	16,506		$	14,105

XML

Note 6 - Shareholders' Equity (Tables)

12 Months Ended

Mar. 31, 2019

Notes Tables

Dividends Declared [Table Text Block]

Declaration Date	Per Share Dividend		Record Date	Total Amount (In thousands)		Payment Date
May 7, 2018	$	0.25	May 18, 2018	$	5,150	May 25, 2018
July 23, 2018	$	0.27	August 3, 2018	$	5,584	August 10, 2018
October 22, 2018	$	0.27	November 5, 2018	$	5,582	November 16, 2018
January 21, 2019	$	0.27	February 4, 2019	$	5,582	February 15, 2019

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Note 7 - Net Income Per Share (Tables)

12 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Year Ended March 31,
	2019		2018		2017
Net income (numerator):
Net income	$	37,740	$	37,283	$	23,819
Shares (denominator)
Weighted average number of common shares outstanding used in basic computation		20,461		20,346		20,232
Common shares issuable upon the vesting of restricted stock		20		77		136
Common shares issuable upon conversion of preferred shares		10		10		10
Shares used in diluted computation		20,491		20,433		20,378
Net income per common share:
Basic	$	1.84	$	1.83	$	1.18
Diluted	$	1.84	$	1.82	$	1.17

XML

Note 8 - Restricted Stock (Tables)

12 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Nonvested Share Activity [Table Text Block]

	Employee Plan Number of Shares (In thousands)			Director Plan Number of Shares (In thousands)			Both Plans Number of Shares (In thousands)
Non-vested restricted stock outstanding at March 31, 2018		133			60			193
Restricted stock granted		47			38			85
Restricted stock vested		(86	)		(30	)		(116	)
Restricted stock forfeited or expired		(12	)		-			(12	)
Non-vested restricted stock outstanding at March 31, 2019		82			68			150

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Note 13 - Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Mar. 31, 2019

Notes Tables

Quarterly Financial Information [Table Text Block]

Quarter Ended:	June 30, 2018		September 30, 2018		December 31, 2018		March 31, 2019
Sales	$	87,390	$	71,396	$	60,068	$	64,565
Gross Profit	$	29,954	$	25,255	$	19,381	$	20,724
Income from operations	$	15,757	$	13,203	$	9,413	$	7,802
Net income	$	12,582	$	10,752	$	7,787	$	6,620
Diluted net income per common share	$	0.62	$	0.52	$	0.38	$	0.32

Quarter Ended:	June 30, 2017		September 30, 2017		December 31, 2017		March 31, 2018
Sales	$	79,657	$	66,711	$	60,110	$	67,322
Gross Profit	$	27,465	$	23,479	$	21,944	$	24,919
Income from operations	$	14,416	$	12,248	$	11,468	$	14,004
Net income	$	9,276	$	8,760	$	9,064	$	10,183
Diluted net income per common share	$	0.45	$	0.43	$	0.44	$	0.50

XML

Note 1 - Summary of Significant Accounting Policies (Details Textual)	12 Months Ended
	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)
Accounts Receivable, Allowance for Credit Loss, Current	$ 39,000	$ 35,000
Inventory Valuation Reserves, Ending Balance	54,000	58,000
Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax	$ 0	$ 0	$ 0
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member]
Number of Suppliers	4	4
Concentration Risk, Percentage	50.00%	50.00%
Building [Member]
Property, Plant and Equipment, Useful Life	30 years
Furniture, Fixtures, Equipment and Computer Software [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	3 years
Furniture, Fixtures, Equipment and Computer Software [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	10 years

XML

Note 1 - Summary of Significant Accounting Policies - Disaggregation of Revenue by Type (Details) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Revenues	$ 283,419	$ 273,800	$ 249,176
Revenues, percentage	100.00%	100.00%	100.00%
Revenues, variance	$ 9,619	$ 24,624
Revenues, variance, percentage	3.50%	9.90%
Internet [Member]
Revenues	$ 240,034	$ 230,319	$ 205,643
Revenues, percentage	84.70%	84.10%	82.50%
Revenues, variance	$ 9,715	$ 24,676
Revenues, variance, percentage	4.20%	12.00%
Contact Center [Member]
Revenues	$ 43,385	$ 43,481	$ 43,533
Revenues, percentage	15.30%	15.90%	17.50%
Revenues, variance	$ (96)	$ (52)
Revenues, variance, percentage	0.20%	0.10%
Reorder Customer [Member]
Revenues	$ 241,780	$ 227,513	$ 206,299
Revenues, percentage	85.30%	83.10%	82.80%
Revenues, variance	$ 14,267	$ 21,214
Revenues, variance, percentage	6.30%	10.30%
New Order Customer [Member]
Revenues	$ 41,639	$ 46,287	$ 42,877
Revenues, percentage	14.70%	16.90%	17.20%
Revenues, variance	$ (4,648)	$ 3,410
Revenues, variance, percentage	10.00%	8.00%

XML

Note 2 - Property and Equipment - Major Classifications of Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 31, 2018
Property and equipment, gross	$ 35,533	$ 34,914
Less: accumulated depreciation	(8,397)	(6,173)
Property and equipment, net	27,136	28,741
Building [Member]
Property and equipment, gross	14,997	14,997
Land [Member]
Property and equipment, gross	3,700	3,700
Building Improvements [Member]
Property and equipment, gross	2,817	2,807
Software and Software Development Costs [Member]
Property and equipment, gross	5,891	5,504
Furniture and Fixtures [Member]
Property and equipment, gross	$ 8,128	$ 7,906

XML

Note 3 - Valuation and Qualifying Accounts - Activity in the Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Balance at beginning of period	$ 35	$ 27	$ 13
Bad debt expense	85	112	421
Write-off of uncollectible accounts receivable	(81)	(104)	(407)
Balance at end of year	$ 39	$ 35	$ 27

XML

Note 4 - Accrued Expenses and Other Current Liabilities - Major Classifications of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 31, 2018
Accrued sales tax	$ 323	$ 449
Accrued credit card fees	404	381
Accrued salaries and benefits	685	966
Accrued professional expenses	281	320
Accrued sales return allowance	184	191
Accrued dividends payable	203	240
Accrued real estate taxes	87	87
Other accrued liabilities	184	201
Accrued expenses and other current liabilities	$ 2,351	$ 2,835

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Note 5 - Income Taxes (Details Textual) - USD ($)	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	31.50%
Income Tax Expense Reduction (Increase) Due to Blended Rate		$ 1,900,000
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability		(430,000)
Effective Income Tax Rate Reconciliation, Tax Expense (Benefit), Share-based Payment Arrangement, Amount	$ (176,000)	(1,086,000)
Tax Adjustments, Settlements, and Unusual Provisions	8,000	$ (150,000)
Domestic Tax Authority [Member]
Operating Loss Carryforwards, Total	$ 0

XML

Note 5 - Income Taxes - Deferred Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 31, 2018
Deferred tax assets:
Accrued expenses	$ 298	$ 346
Deferred stock compensation	412	353
Bad debt and inventory reserves	22	22
Total deferred tax assets	732	721
Deferred tax liabilities:
Property and equipment	1,853	1,717
Total net deferred taxes	$ (1,121)	$ (996)

XML

Note 5 - Income Taxes - Components of Income Tax Provision (Details) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Current taxes
Federal	$ 9,718	$ 15,012	$ 11,095
State	1,538	1,586	1,059
Total current taxes	11,256	16,598	12,154
Deferred taxes
Federal	108	(83)	1,781
State	17	(9)	170
Total deferred taxes	125	(92)	1,951
Total provision for income taxes	$ 11,381	$ 16,506	$ 14,105

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Note 5 - Income Taxes - Reconciliation of Income Tax Provision (Details) - USD ($)	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Income taxes at U.S. statutory rates	$ 10,315,000	$ 16,943,000	$ 13,274,000
State income taxes, net of federal tax benefit	1,233,000	1,078,000	858,000
Restricted stock windfall adjustment	(176,000)	(1,086,000)
Reduction of deferred tax liability due to rate reduction		(430,000)
Other	9,000	1,000	(27,000)
Provision for income taxes	$ 11,381,000	$ 16,506,000	$ 14,105,000

XML

Note 6 - Shareholders' Equity (Details Textual) - USD ($)	1 Months Ended	12 Months Ended
	Apr. 30, 1998	Mar. 31, 2019	Mar. 31, 2018	Jan. 25, 2019	Jul. 23, 2018	Jan. 22, 2018	May 08, 2017	Aug. 01, 2011	Nov. 01, 2010	Oct. 31, 2008	Nov. 08, 2006
Preferred Stock, Shares Issued, Total	250,000	3,000	3,000
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001	$ 0.001
Shares Issued, Price Per Share	$ 4
Payments of Stock Issuance Costs	$ 112,187
Convertible Preferred Stock, Shares Issued upon Conversion	4.05
Preferred Stock, Liquidation Preference Per Share	$ 4	$ 4	$ 4
Preferred Stock, Shares Outstanding, Ending Balance		3,000	3,000
Stock Repurchase Program, Authorized Amount				$ 30,000,000				$ 20,000,000	$ 20,000,000	$ 20,000,000	$ 20,000,000
Treasury Stock, Shares, Acquired		0	0
Stock Repurchase Program, Remaining Authorized Repurchase Amount		$ 40,200,000
Dividends Payable, Amount Per Share					$ 0.27	$ 0.25	$ 0.20
Convertible Preferred Stock [Member]
Preferred Stock, Shares Outstanding, Ending Balance		2,500	2,500

XML

Note 6 - Shareholder's Equity - Declared Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Mar. 31, 2019	Jul. 23, 2018	Jan. 22, 2018	May 08, 2017
Per Share Dividend (in dollars per share)		$ 0.27	$ 0.25	$ 0.20
Dividend Declared May 7, 2018 [Member]
Declaration Date	May 07, 2018
Per Share Dividend (in dollars per share)	$ 0.25
Record Date	May 18, 2018
Total Amount	$ 5,150
Payment Date	May 25, 2018
Dividend Declared July 23, 2018 [Member]
Declaration Date	Jul. 23, 2018
Per Share Dividend (in dollars per share)	$ 0.27
Record Date	Aug. 03, 2018
Total Amount	$ 5,584
Payment Date	Aug. 10, 2018
Dividend Declared October 22, 2018 [Member]
Declaration Date	Oct. 22, 2018
Per Share Dividend (in dollars per share)	$ 0.27
Record Date	Nov. 05, 2018
Total Amount	$ 5,582
Payment Date	Nov. 16, 2018
Dividend Declared January 21, 2019 [Member]
Declaration Date	Jan. 21, 2019
Per Share Dividend (in dollars per share)	$ 0.27
Record Date	Feb. 04, 2019
Total Amount	$ 5,582
Payment Date	Feb. 15, 2019

XML

Note 7 - Net Income Per Share (Details Textual) - shares	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	150,017	77,350

XML

Note 7 - Net Income Per Share - Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Net income (numerator):
Net income	$ 6,620	$ 7,787	$ 10,752	$ 12,582	$ 10,183	$ 9,064	$ 8,760	$ 9,276	$ 37,740	$ 37,283	$ 23,819
Shares (denominator)
Weighted average number of common shares outstanding used in basic computation (in shares)									20,461	20,346	20,232
Common shares issuable upon the vesting of restricted stock (in shares)									20	77	136
Common shares issuable upon conversion of preferred shares (in shares)									10	10	10
Shares used in diluted computation (in shares)									20,491	20,433	20,378
Net income per common share
Basic (in dollars per share)									$ 1.84	$ 1.83	$ 1.18
Diluted (in dollars per share)	$ 0.32	$ 0.38	$ 0.52	$ 0.62	$ 0.50	$ 0.44	$ 0.43	$ 0.45	$ 1.84	$ 1.82	$ 1.17

XML

Note 8 - Restricted Stock (Details Textual) - USD ($) $ in Thousands	1 Months Ended			12 Months Ended
	Jul. 31, 2016	Jul. 31, 2015	Jul. 31, 2012	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017	Jul. 28, 2006
Percentage of Automatic Increase in Shares Available for Issuance			10.00%
Share-based Payment Arrangement, Noncash Expense, Total				$ 3,097	$ 2,575	$ 1,935
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance				150,000	193,000
2006 Employee Equity Compensation Restricted Stock Plan (the "Employee Plan") | Restricted Stock [Member]
Common Stock, Capital Shares Reserved for Future Issuance				972,175			1,000,000
2006 Outside Director Equity Compensation Restricted Stock Plan (the "Director Plan") [Member] | Restricted Stock [Member]
Common Stock, Capital Shares Reserved for Future Issuance			400,000	272,000			200,000
2015 Outside Director Equity Compensation Restricted Stock Plan [Member] | Restricted Stock [Member]
Common Stock, Capital Shares Reserved for Future Issuance		400,000		97,500
Percentage of Automatic Increase in Shares Available for Issuance		10.00%
2016 Employee Equity Compensation Restricted Stock Plan [Member] | Restricted Stock [Member]
Common Stock, Capital Shares Reserved for Future Issuance	1,000,000			85,183
2016 Employee Equity Compensation Restricted Stock Plan [Member] | Restricted Stock [Member] | Minimum [Member]
Restriction Period	1 year
2016 Employee Equity Compensation Restricted Stock Plan [Member] | Restricted Stock [Member] | Maximum [Member]
Restriction Period	10 years
Employee and Director Equity Compensation Plan [Member] | Non-vested Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance				150,017	192,968
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total				72,899	75,081
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total				$ 3,900	$ 4,400
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition				1 year 255 days	1 year 182 days

XML

Note 8 - Restricted Stock - Non-vested Restricted Stock (Details) shares in Thousands	12 Months Ended
	Mar. 31, 2019 shares
Non-vested restricted stock outstanding at March 31, 2018 (in shares)	193
Restricted stock granted (in shares)	85
Restricted stock vested (in shares)	(116)
Restricted stock forfeited or expired (in shares)	(12)
Non-vested restricted stock outstanding at March 31, 2019 (in shares)	150
Employee Plan [Member]
Non-vested restricted stock outstanding at March 31, 2018 (in shares)	133
Restricted stock granted (in shares)	47
Restricted stock vested (in shares)	(86)
Restricted stock forfeited or expired (in shares)	(12)
Non-vested restricted stock outstanding at March 31, 2019 (in shares)	82
Director Plan [Member]
Non-vested restricted stock outstanding at March 31, 2018 (in shares)	60
Restricted stock granted (in shares)	38
Restricted stock vested (in shares)	(30)
Restricted stock forfeited or expired (in shares)
Non-vested restricted stock outstanding at March 31, 2019 (in shares)	68

XML

Note 10 - Commitments and Contingencies (Details Textual)			1 Months Ended	12 Months Ended
	Mar. 16, 2019 USD ($)	Mar. 16, 2016 USD ($) shares	Jan. 31, 2016 ft²	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($) ft²
Chief Executive Officer [Member]
Term of Agreement		3 years
Salary and Wage, Officer, Excluding Cost of Good and Service Sold	$ 600,000	$ 600,000
Stock Issued During Period, Shares, Restricted Stock Award, Gross | shares		120,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years
Delray Beach Property [Member]
Area of Real Estate Property | ft²			88,000
Percentage of Property Leased to Tenants			48.00%
Number of Tenants			2	2
Lessor, Operating Lease, Remaining Weighted Average Lease Term				4 years 182 days
Rental Income, Nonoperating				$ 622,000	$ 604,000
Operating Leases, Future Minimum Payments Receivable, Current				645,000
Operating Leases, Future Minimum Payments Receivable, in Two Years				378,000
Operating Leases, Future Minimum Payments Receivable, in Three Years				289,000
Operating Leases, Future Minimum Payments Receivable, in Four Years				298,000
Operating Leases, Future Minimum Payments Receivable, in Five Years				$ 307,000
Operating Lease Agreement [Member]
Area of Real Estate Property | ft²						65,300
Operating Leases, Rent Expense, Net, Total						$ 519,000

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Note 11 - Employee Benefit Plan (Details Textual) - USD ($)	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Deferred Compensation Arrangement with Individual, Requisite Service Period	1 year
Defined Contribution Plan With Individual Age	21 years
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Amount	$ 192,000	$ 166,000	$ 181,000

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Note 12 - Subsequent Events (Details Textual)						2 Months Ended	12 Months Ended
	Jul. 26, 2019 USD ($) shares	May 13, 2019 USD ($)	May 06, 2019 USD ($) $ / shares	Mar. 16, 2019 USD ($)	Mar. 16, 2016 USD ($)	May 27, 2019 USD ($) $ / shares shares	Mar. 31, 2019 shares	Mar. 31, 2018 shares	Jul. 23, 2018 $ / shares	Jan. 22, 2018 $ / shares	May 08, 2017 $ / shares
Dividends Payable, Amount Per Share | $ / shares									$ 0.27	$ 0.25	$ 0.20
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares							85,000
Treasury Stock, Shares, Acquired | shares							0	0
Forecast [Member]
Gross-up Payment, Percentage	28.20%
Chief Executive Officer [Member]
Salary and Wage, Officer, Excluding Cost of Good and Service Sold				$ 600,000	$ 600,000
Chief Executive Officer [Member] | Forecast [Member]
Payment for Lost Compensation	$ 10,800
Chief Executive Officer [Member] | Forecast [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares	40,000
Subsequent Event [Member]
Dividends Payable, Amount Per Share | $ / shares			$ 0.27
Dividends Payable			$ 5,600,000
Treasury Stock, Shares, Acquired | shares						450,000
Treasury Stock, Value, Acquired, Cost Method						$ 8,600,000
Treasury Stock Acquired, Average Cost Per Share | $ / shares						$ 19.08
Dividends Payable, Date Declared			May 06, 2019
Dividends Payable, Date to be Paid			May 24, 2019
Dividends Payable, Date of Record			May 17, 2019
Subsequent Event [Member] | Chief Executive Officer [Member]
Salary and Wage, Officer, Excluding Cost of Good and Service Sold		$ 600,000
Executive Employment Agreement, Period of Notice Required for Termination of Employment in Event of Change in Control		30 days
Executive Employment Agreement, Salary Multiple of One-time Payment in Event of Termination Due to Change in Control		2

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Note 13 - Quarterly Financial Data (Unaudited) - Summarized Unaudited Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Sales	$ 64,565	$ 60,068	$ 71,396	$ 87,390	$ 67,322	$ 60,110	$ 66,711	$ 79,657
Gross Profit	20,724	19,381	25,255	29,954	24,919	21,944	23,479	27,465	$ 95,314	$ 97,807	$ 79,314
Income from operations	7,802	9,413	13,203	15,757	14,004	11,468	12,248	14,416	46,174	52,136	37,483
Net income	$ 6,620	$ 7,787	$ 10,752	$ 12,582	$ 10,183	$ 9,064	$ 8,760	$ 9,276	$ 37,740	$ 37,283	$ 23,819
Diluted net income per common share (in dollars per share)	$ 0.32	$ 0.38	$ 0.52	$ 0.62	$ 0.50	$ 0.44	$ 0.43	$ 0.45	$ 1.84	$ 1.82	$ 1.17