0001571049-16-019272.txt : 20161101 0001571049-16-019272.hdr.sgml : 20161101 20161101122138 ACCESSION NUMBER: 0001571049-16-019272 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 41 CONFORMED PERIOD OF REPORT: 20160930 FILED AS OF DATE: 20161101 DATE AS OF CHANGE: 20161101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETMED EXPRESS INC CENTRAL INDEX KEY: 0001040130 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 650680967 STATE OF INCORPORATION: FL FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28827 FILM NUMBER: 161963878 BUSINESS ADDRESS: STREET 1: 1441 SW 29 AVENUE CITY: POMPANO BEACH STATE: FL ZIP: 33069 BUSINESS PHONE: 9549794788 MAIL ADDRESS: STREET 1: 1441 SW 29 AVENUE CITY: POMPANO BEACH STATE: FL ZIP: 33069 10-Q 1 t1600684_10q.htm FORM 10-Q

UNITED STATES

securities and exchange commission

Washington D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

¨ 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

incorporation or organization)

(I.R.S. Employer

Identification No.)

1441 S.W. 29^th Avenue, Pompano Beach, Florida 33069

(Address of principal executive offices, including zip code)

(954) 979-5995

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

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

Large accelerated filer ¨	Accelerated filer x
Non-accelerated filer ¨	Smaller reporting company ¨
(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 20,526,525 Common Shares, $.001 par value per share at November 1, 2016.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for per share amounts)

	September 30,		March 31,
	2016		2016
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	51,896	$	37,639
Accounts receivable, less allowance for doubtful accounts of $10 and $13, respectively		1,369		1,724
Inventories - finished goods		14,820		25,586
Prepaid expenses and other current assets		6,486		2,435
Prepaid income taxes		21		243
Total current assets		74,592		67,627

Noncurrent assets:
Property and equipment, net		20,576		20,929
Intangible assets		860		860
Deferred tax assets		499		863
Total noncurrent assets		21,935		22,652

Total assets	$	96,527	$	90,279

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	6,147	$	5,004
Accrued expenses and other current liabilities		2,416		2,080
Total liabilities		8,563		7,084

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; 20,527 and 20,447 shares issued and outstanding, respectively		21		20
Additional paid-in capital		5,932		4,871
Retained earnings		82,002		78,295

Total shareholders' equity		87,964		83,195

Total liabilities and shareholders' equity	$	96,527	$	90,279

See accompanying notes to condensed consolidated financial statements.

PETMED EXPRESS, INC. AND SUBSIDIARIES

condensed consolidated statementS of COMPREHENSIVE INCOME

(In thousands, except for per share amounts)(Unaudited)

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2016		2015			2016		2015

Sales	$	60,791	$	56,725		$	133,278	$	128,359
Cost of sales		42,727		37,812			92,762		86,480

Gross profit		18,064		18,913			40,516		41,879

Operating expenses:
General and administrative		5,747		5,388			11,845		11,187
Advertising		4,382		6,249			10,142		14,134
Depreciation		204		186			398		377
Total operating expenses		10,333		11,823			22,385		25,698

Income from operations		7,731		7,090			18,131		16,181

Other income:
Interest income, net		32		55			60		105
Other, net		23		(4	)		76		(8	)
Total other income		55		51			136		97

Income before provision for income taxes		7,786		7,141			18,267		16,278

Provision for income taxes		2,887		2,639			6,774		6,019

Net income	$	4,899	$	4,502		$	11,493	$	10,259

Net change in unrealized gain (loss) on short term investments		-		16			-		(19	)

Comprehensive income	$	4,899	$	4,518		$	11,493	$	10,240

Net income per common share:
Basic	$	0.24	$	0.22		$	0.57	$	0.51
Diluted	$	0.24	$	0.22		$	0.56	$	0.51

Weighted average number of common shares outstanding:
Basic		20,234		20,126			20,208		20,100
Diluted		20,377		20,246			20,355		20,222

Cash dividends declared per common share	$	0.19	$	0.18		$	0.38	$	0.36

See accompanying notes to condensed consolidated financial statements.

PETMED EXPRESS, INC. AND SUBSIDIARIES

condensed consolidated statementS of cash flows

(In thousands)(Unaudited)

	Six Months Ended
	September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	11,493		$	10,259
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		398			377
Share based compensation		946			777
Deferred income taxes		364			4
Bad debt expense		352			227
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable		3			81
Inventories - finished goods		10,765			664
Prepaid income taxes		222			(60	)
Prepaid expenses and other current assets		1,764			(86	)
Accounts payable		1,143			2,125
Income taxes payable		-			(50	)
Accrued expenses and other current liabilities		335			(277	)
Net cash provided by operating activities		27,785			14,041

Cash flows from investing activities:
Net change in investments		-			(33	)
Purchases of property and equipment		(5,859	)		(175	)
Net cash used in investing activities		(5,859	)		(208	)

Cash flows from financing activities:
Dividends paid		(7,784	)		(7,358	)
Excess tax benefits related to restricted stock		115			92
Net cash used in financing activities		(7,669	)		(7,266	)

Net increase in cash and cash equivalents		14,257			6,567
Cash and cash equivalents, at beginning of period		37,639			35,613

Cash and cash equivalents, at end of period	$	51,896		$	42,180

Supplemental disclosure of cash flow information:

Cash paid for income taxes	$	6,186		$	6,033

Prepaid property and equipment in current assets	$	5,815		$	-

Dividends payable in accrued expenses	$	144		$	154

See accompanying notes to condensed consolidated financial statements.

PETMED EXPRESS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 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 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. The majority of the Company’s sales are to residents in the United States. The Company’s corporate headquarters and distribution facility are located in Pompano Beach, Florida. In the third quarter of fiscal 2017, we plan on relocating the corporate headquarters and distribution facility to Delray Beach, Florida. The Company’s fiscal year end is March 31, and references herein to Fiscal 2017 or Fiscal 2016 refer to the Company's fiscal years ending March 31, 2017 and 2016, respectively.

Basis of Presentation and Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company at September 30, 2016, the Statements of Comprehensive Income for the three and six months ended September 30, 2016 and 2015, and Cash Flows for the six months ended September 30, 2016 and 2015. The results of operations for the three and six months ended September 30, 2016 are not necessarily indicative of the operating results expected for the fiscal year ending March 31, 2017. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2016. The Condensed Consolidated Financial Statements include the accounts of PetMed Express, Inc. and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated upon consolidation.

Use of Estimates

The preparation of Condensed 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 Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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.

Recent Accounting Pronouncements

On March 30, 2016, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update on Stock Compensation Improvements to Employee Share-Based Payment Accounting (Topic 718). The objective of this update is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The update becomes effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on its 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.

Note 2: Net Income Per Share

In accordance with the provisions of Accounting Standards Codification (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 the 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):

	Three Months Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Net income (numerator):
Net income	$	4,899	$	4,502	$	11,493	$	10,259
Shares (denominator):
Weighted average number of common shares outstanding used in basic computation		20,234		20,126		20,208		20,100
Common shares issuable upon vesting of restricted stock		133		110		137		112
Common shares issuable upon conversion of preferred shares		10		10		10		10
Shares used in diluted computation		20,377		20,246		20,355		20,222
Net income per common share:
Basic	$	0.24	$	0.22	$	0.57	$	0.51
Diluted	$	0.24	$	0.22	$	0.56	$	0.51

For the three and six months ended September 30, 2016, 30,000 shares of common restricted stock 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. All other common restricted stock was included in the diluted net income per common share computation for the three and six months ended September 30, 2015.

Note 3: Accounting for Stock-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. The Company had 977,879 restricted common shares issued under the 2006 Employee Equity Compensation Restricted Stock Plan (“2006 Employee Plan”), 272,000 restricted common shares issued under the 2006 Outside Director Equity Compensation Restricted Stock Plan (“2006 Director Plan”), and 30,000 restricted common shares issued under the 2015 Outside Director Equity Compensation Restricted Stock Plan (“2015 Director Plan”) at September 30, 2016, all shares of which were issued subject to a restriction or forfeiture period which lapse 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.

In July 2016, the Board of Directors approved the issuance of 50,000 restricted shares to certain employees of the Company under the 2006 Employee Plan, with a fair value of $19.60 per share. In July 2016, the Board of Directors approved the issuance of 30,000 restricted shares to directors of the Company under the 2015 Director Plan, with a fair value of $20.73 per share. For the quarters ended September 30, 2016 and 2015, the Company recognized $483,000 and $406,000, respectively, of compensation expense related to the Employee and Director Plans. For the six months ended September 30, 2016 and 2015, the Company recognized $946,000 and $777,000, respectively, of compensation expense related to the Employee and Director Plans. At September 30, 2016 and 2015, there was $4.3 million and $2.4 million of unrecognized compensation cost related to the non-vested restricted stock awards, respectively, which is expected to be recognized over the next three years. At September 30, 2016 and 2015, there were 273,000 and 186,000 non-vested restricted shares, respectively.

On July 29, 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.

Note 4: 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. The buildings located at 420 South Congress Avenue, Delray Beach, Florida, the Company’s new corporate headquarters and distribution facility (“the Property”) (described below) will be depreciated over a period of thirty years. The furniture, fixtures, equipment, and computer software are depreciated over periods ranging from three to seven years. Leasehold improvements and assets under capital lease agreements are amortized over the shorter of the underlying lease agreement or the useful life of the asset.

On December 22, 2015, the Company entered into an agreement for the purchase of the Property at a purchase price of $18.5 million, plus closing costs. The transaction closed on January 19, 2016. 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. Once the Property is renovated to the Company’s specifications and ready for its operation, expected in the third quarter of fiscal 2017, the Company intends to occupy approximately 97,000 square feet for its corporate headquarters and distribution facility, and to continue to operate the remaining office and warehouse space pursuant to existing leases. At September 30, 2016, the Company paid approximately $5.8 million for building improvements and equipment related to the newly purchased Property, which was recorded as a prepaid current asset, since the Property will not be ready to be put into use until the quarter ending December 31, 2016.

Note 5: Fair Value

The Company carries various assets and liabilities at fair value in the Condensed 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. At September 30, 2016, the Company had invested the majority of its $51.9 million cash and cash equivalents balance in money market funds which are classified within level 1.

Note 6: Commitments and Contingencies

The Company has settled complaints that had been filed with various states’ regulatory 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.

Note 7: Changes in Shareholders’ Equity and Comprehensive Income:

Changes in shareholders’ equity for the six months ended September 30, 2016 are summarized below (in thousands):

	Additional
	Paid-In		Retained
	Capital		Earnings

Beginning balance at March 31, 2016:	$	4,871	$	78,295
Share based compensation		946		-
Dividends declared		-		(7,786	)
Excess tax benefits related to restricted stock		115		-
Net income		-		11,493

Ending balance at September 30, 2016:	$	5,932	$	82,002

No shares of treasury stock were purchased or retired in the six months ended September 30, 2016 and 2015.

Note 8: Income Taxes

For the quarters ended September 30, 2016 and 2015, the Company recorded an income tax provision of approximately $2.9 million and $2.6 million, respectively, and for the six months ended September 30, 2016 and 2015, the Company recorded an income tax provision of approximately $6.8 million and $6.0 million, respectively. The increase to the income tax provision for the three and six months ended September 30, 2016, is related to increased operating income. The effective tax rate for each of the quarter and six months ended September 30, 2016 was approximately 37.1%, compared to 37.0% for the quarter and six months ended September 30, 2015.

Note 9: Subsequent Events

On October 24, 2016 our Board of Directors declared a quarterly dividend of $0.19 per share. The Board established a November 7, 2016 record date and a November 18, 2016 payment date. Based on the outstanding share balance as of November 1, 2016 the Company estimates the dividend payable to be approximately $3.9 million.

ITEM 2. 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 82% of all sales were generated via the Internet for the quarter ended September 30, 2016, compared to 81% for the quarter ended September 30, 2015. The Company’s sales consist of products sold mainly to retail consumers. The three-month average purchase was approximately $82 and $80 per order for the quarters ended September 30, 2016 and 2015, respectively, and the six-month average purchase was approximately $82 and $81 per order for the six months ended September 30, 2016 and 2015, respectively.

Critical Accounting Policies

Our discussion and analysis of our financial condition and the results of our operations are based upon our Condensed Consolidated Financial Statements and the data used to prepare them. The Company’s Condensed 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 primarily to retail consumers. The Company’s policy is to recognize revenue from product sales upon shipment, when the rights of ownership and risk of loss have passed to the customer. Outbound shipping and handling fees are included in sales and are billed upon shipment. Shipping expenses 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 $10,000 at September 30, 2016 compared to $13,000 at March 31, 2016.

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 market value using a weighted average cost method. The Company writes down its inventory for estimated obsolescence. The inventory reserve was approximately $37,000 at September 30, 2016 compared to $64,000 at March 31, 2016.

Advertising

The Company's advertising expense consists primarily of Internet marketing and direct mail/print 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.

Accounting for income taxes

The Company accounts for income taxes under the provisions of ASC Topic 740 (“Accounting for Income Taxes”), which generally requires 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 Condensed 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 Condensed Consolidated Statements of Comprehensive Income:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2016			2015			2016			2015

Sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		70.3			66.7			69.6			67.4

Gross profit		29.7			33.3			30.4			32.6

Operating expenses:
General and administrative		9.5			9.5			8.9			8.7
Advertising		7.2			11.0			7.6			11.0
Depreciation		0.3			0.3			0.3			0.3
Total operating expenses		17.0			20.8			16.8			20.0

Income from operations		12.7			12.5			13.6			12.6

Total other income		0.1			0.1			0.1			0.1

Income before provision for income taxes		12.8			12.6			13.7			12.7

Provision for income taxes		4.7			4.7			5.1			4.7

Net income		8.1	%		7.9	%		8.6	%		8.0	%

Three Months Ended September 30, 2016 Compared With Three Months Ended September 30, 2015, and Six Months Ended September 30, 2016 Compared With Six Months Ended September 30, 2015

Sales

Sales increased by approximately $4.1 million, or 7.2%, to approximately $60.8 million for the quarter ended September 30, 2016, from approximately $56.7 million for the quarter ended September 30, 2015. For the six months ended September 30, 2016, sales increased by approximately $4.9 million, or 3.8%, to approximately $133.3 million compared to $128.4 million for the six months ended September 30, 2015. The increase in sales for the three and six months ended September 30, 2016 was primarily due to increased new order and reorder sales. The Company acquired approximately 131,000 new customers for the quarter ended September 30, 2016, compared to approximately 127,000 new customers for the same period the prior year. For the six months ended September 30, 2016 the Company acquired approximately 289,000 new customers, compared to 275,000 new customers for the six months ended September 30, 2015. The following chart illustrates sales by various sales classifications:

	Three Months Ended September 30,
Sales (In thousands)	2016		%			2015		%			$ Variance		% Variance

Reorder Sales	$	50,086		82.4	%	$	46,652		82.2	%	$	3,434		7.4	%
New Order Sales	$	10,705		17.6	%	$	10,073		17.8	%	$	632		6.3	%

Total Net Sales	$	60,791		100.0	%	$	56,725		100.0	%	$	4,066		7.2	%

Internet Sales	$	50,036		82.3	%	$	46,161		81.4	%	$	3,875		8.4	%
Contact Center Sales	$	10,755		17.7	%	$	10,564		18.6	%	$	191		1.8	%

Total Net Sales	$	60,791		100.0	%	$	56,725		100.0	%	$	4,066		7.2	%

	Six Months Ended September 30,
Sales (In thousands)	2016		%			2015		%			$ Variance			% Variance

Reorder Sales	$	109,252		82.0	%	$	106,211		82.7	%	$	3,041			2.9	%
New Order Sales	$	24,026		18.0	%	$	22,148		17.3	%	$	1,878			8.5	%

Total Net Sales	$	133,278		100.0	%	$	128,359		100.0	%	$	4,919			3.8	%

Internet Sales	$	109,386		82.1	%	$	103,853		80.9	%	$	5,533			5.3	%
Contact Center Sales	$	23,892		17.9	%	$	24,506		19.1	%	$	(614	)		-2.5	%

Total Net Sales	$	133,278		100.0	%	$	128,359		100.0	%	$	4,919			3.8	%

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 heartworm, and flea and tick medications. For the quarters ended June 30, September 30, December 31, and March 31 of Fiscal 2016, the Company’s sales were approximately 30%, 24%, 22%, and 24%, respectively.

Cost of sales

Cost of sales increased by approximately $4.9 million, or 13%, to approximately $42.7 million for the quarter ended September 30, 2016, from approximately $37.8 million for the quarter ended September 30, 2015. For the six months ended September 30, 2016, cost of sales increased by approximately $6.3 million, or 7.3%, to approximately $92.8 million compared to $86.5 million for the same period in the prior year. The increase in cost of sales is directly related to the increase in sales during the quarter and six months ended September 30, 2016. Cost of sales as a percent of sales was 70.3% and 66.7% for the quarters ended September 30, 2016 and 2015, respectively, and for the six months ended September 30, 2016 and 2015 the cost of sales was 69.6% and 67.4%, respectively. The increase to cost of sales as a percentage of sales for the quarter and six months ended September 30, 2016 is mainly attributed to an increase in product costs on certain brands and additional discounts given to customers to increase sales during the quarter and six months.

Gross profit

Gross profit decreased by approximately $849,000, or 4.5%, to approximately $18.1 million for the quarter ended September 30, 2016, from approximately $18.9 million for the quarter ended September 30, 2015. For the six months ended September 30, 2016 gross profit decreased by approximately $1.4 million, or 3.3%, to approximately $40.5 million, compared to $41.9 million for the same period in the prior year. The decrease in gross profit is directly related to an increase in product costs on certain brands and additional discounts given to customers to increase sales during the quarter and six months. Gross profit as a percentage of sales was 29.7% and 33.3% for the three months ended September 30, 2016 and 2015, respectively, and for the six months ended September 30, 2016 and 2015, gross profit was 30.4% and 32.6%, respectively. The gross profit percentage decrease for the quarter and six months ended September 30, 2016 is mainly attributed to an increase in product costs on certain brands and additional discounts given to customers to increase sales during the quarter and six months.

General and administrative expenses

General and administrative expenses increased by approximately $359,000, or 6.7%, to approximately $5.7 million for the quarter ended September 30, 2016, from approximately $5.4 million for the quarter ended September 30, 2015. The increase in general and administrative expenses for the quarter ended September 30, 2016 was primarily due to the following: a $258,000 increase in payroll expenses; a $95,000 increase in bank service fees; a $59,000 increase in bad debt expenses relating to increased credit card chargebacks during the quarter; and a $10,000 net increase in other expenses which included telephone expenses, licenses, professional fees, and travel expenses. Offsetting the increase was a $34,000 decrease to property expenses relating to computer maintenance and a $29,000 decrease to insurance expenses.

For the six months ended September 30, 2016, general and administrative expenses increased by approximately $658,000, or 5.9%, to approximately $11.8 million from approximately $11.2 million for the six months ended September 30, 2015. The increase in general and administrative expenses for the six months ended September 30, 2016 was primarily due to the following: a $546,000 increase in payroll expenses; a $129,000 increase in bank service fees; and a $124,000 increase in bad debt expenses relating to increased credit card chargebacks during the quarter. Offsetting the increase was a $75,000 decrease to property expenses relating to computer maintenance; a $63,000 decrease to insurance expenses; and a $3,000 net decrease in other expenses which included telephone expenses, licenses, professional fees, office expenses, and travel expenses.

Advertising expenses

Advertising expenses decreased by approximately $1.8 million, or 30%, to approximately $4.4 million for the quarter ended September 30, 2016, from approximately $6.2 million for the quarter ended September 30, 2015. For the six months ended September 30, 2016, advertising expenses decreased by approximately $4.0 million, or 28%, to approximately $10.1 million compared to advertising expenses of approximately $14.1 million for the six months ended September 30, 2015. The decrease in advertising expenses for the three and six months ended September 30, 2016 is mainly attributed to the elimination of television advertising spending. The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, decreased to $33 for the quarter ended September 30, 2016, compared to $49 for the quarter ended September 30, 2015. For the six months ended September 30, 2016 and 2015 the advertising costs of acquiring a new customer were $35 and $51, respectively. The decrease in customer acquisition costs for the quarter and six months ended September 30, 2016 is attributed to increased sales conversion. Advertising cost of acquiring a new customer can be impacted by the advertising environment, the effectiveness of our advertising creative, 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 7.2% and 11.0% for the quarters ended September 30, 2016 and 2015, respectively, and for the six months ended September 30, 2016 and 2015 advertising expense was 7.6% and 11.0%, respectively. The decrease in advertising expense as a percentage of total sales for the quarter and six months ended September 30, 2016 is attributed to an elimination of television advertising spending. The Company currently anticipates advertising as a percentage of sales to be approximately 7.0% for Fiscal 2017. However, the advertising percentage will fluctuate quarter to quarter due to seasonality and advertising availability. For the fiscal year ended March 31, 2016, quarterly advertising expenses as a percentage of sales ranged between 7% and 11%.

Depreciation

Depreciation expense increased by approximately $18,000 to approximately $204,000 for the quarter ended September 30, 2016, from approximately $186,000 for the quarter ended September 30, 2015. For the six months ended September 30, 2016 depreciation expense increased by approximately $21,000 to $398,000 compared to $377,000 for the same period in the prior year. The increase to depreciation expense for the quarter and six months ended September 30, 2016 can be attributed to an increase in new property and equipment additions.

Other income

Other income increased by approximately $4,000 to approximately $55,000 for the quarter ended September 30, 2016 from approximately $51,000 for the quarter ended September 30, 2015. For the six months ended September 30, 2016 other income increased by approximately $39,000 to approximately $136,000 compared to approximately $97,000 for the same period in the prior year. The increase to other income for the quarter and six months ended September 30, 2016 is related to rental revenue offset by decreased 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 as of September 30, 2016, on any quarterly dividend payment, or on its operating activities.

Provision for income taxes

For the quarters ended September 30, 2016 and 2015, the Company recorded an income tax provision of approximately $2.9 million and $2.6 million, respectively, and for the six months ended September 30, 2016 and 2015, the Company recorded an income tax provision of approximately $6.8 million and $6.0 million, respectively. The increase to the income tax provision for the three and six months ended September 30, 2016, is related to an increase in operating income. The effective tax rate for the quarter and six months ended September 30, 2016 was approximately 37.1%, compared to 37.0% for the quarter and six months ended September 30, 2015. The Company estimates its effective tax rate will be approximately 37.0% for Fiscal 2017.

Liquidity and Capital Resources

The Company’s working capital at September 30, 2016 and March 31, 2016 was $66.0 million and $60.5 million, respectively. The $5.5 million increase in working capital was primarily attributable to cash flow generated from operations, offset by dividends paid. Net cash provided by operating activities was $27.8 million and $14.0 million for the six months ended September 30, 2016 and 2015, respectively. This change can be mainly attributed to a decrease in the Company’s inventory balance, compared to the same period in the prior year. Net cash used in investing activities increased to $5.9 million for the six months ended September 30, 2016, compared to net cash used in investing activities of $208,000 for the six months ended September 30, 2015. This change in investing activities is related to increased property and equipment additions related to the Company’s new corporate headquarters and distribution facility in Delray Beach, Florida. Net cash used in financing activities was $7.7 million for the six months ended September 30, 2016, compared to $7.3 million for the same period in the prior year, which represented an increase in the dividend paid in the period ended September 30, 2016.

At September 30, 2016, the Company had approximately $10.2 million remaining under the Company’s share repurchase plan. Subsequent to September 30, 2016, on October 24, 2016 our Board of Directors declared a $0.19 per share dividend. The Board established a November 7, 2016 record date and a November 18, 2016 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 dividends, or on its operating activities. At September 30, 2016 the Company had no outstanding lease commitments except for the lease for its 65,300 square foot facility in Pompano Beach, Florida. 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 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 $4.0 million forecasted for capital expenditures for the remainder of Fiscal 2017, 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 September 30, 2016.

Cautionary Statement Regarding Forward-Looking Information

Certain information in this Quarterly Report on Form 10-Q 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," "plans," "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 quarterly report. When used in this quarterly report on Form 10-Q, "PetMed Express," "1-800-PetMeds," "PetMeds," "PetMed," "PetMeds.com," "PetMed.com," "PetMed Express.com," "the Company," "we," "our," and "us" refers to PetMed Express, Inc. and our subsidiaries.

ITEM 3. 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 investments. At September 30, 2016, we had $51.9 million in cash and cash equivalents, a majority of our cash and cash equivalents and investments generate 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 investments. It would also impact the market value of our investments. Our investments 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 September 30, 2016, we had no debt obligations.

ITEM 4. 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 promulgated under the Securities Exchange Act of 1934, as amended) as of the quarter ended September 30, 2016, the end of the period covered by this report (the "Evaluation Date"). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective such that the information relating to our Company, including our consolidated subsidiaries, required to be disclosed by the Company in reports that it files or submits under the Exchange Act: (1) is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and (2) is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

part ii - other information

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition, results of operations, and trading price of our common stock. Please refer to our Annual Report on Form 10-K for Fiscal Year 2016 for additional information concerning these and other uncertainties that could negatively impact the Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The Company did not make any sales of unregistered securities during the second quarter of Fiscal 2017.

Issuer Purchases of Equity Securities

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

At the 2016 Annual Meeting of Shareholders (the “2016 Annual Meeting”) of PetMed Express, Inc. (the “Company”) held on July 29, 2016, the Company’s shareholders, on the recommendation of the Company’s Board of Directors (the “Board”), approved the PetMed Express, Inc. 2016 Employee Equity Compensation Restricted Stock Plan (the “2016 Employee Plan”), in accordance with the voting results set forth for Proposal 4 as reported in the Company’s Form 8-K filed August 1, 2016 under Item 5.07. The Board approved the 2016 Employee Plan on May 31, 2016, subject to approval by the Company’s shareholders.

A description of the 2016 Employee Plan and the principal terms and conditions and the awards contemplated thereunder are set forth under the heading “Item 4: Approval of the 2016 Employee Equity Compensation Restricted Stock Plan” on pages 7-9 of the Company’s definitive proxy statement filed with the Securities and Exchange Commission on June 13, 2016, which description is incorporated by reference herein. Such description does not purport to be complete and is qualified in its entirety by reference to the full text of the 2016 Employee Plan, filed as Exhibit 10.13 to this Quarterly Report on Form 10-Q and incorporated by reference herein.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report.

10.13

2016 Employee Equity Compensation Restricted Stock Plan (Incorporated by reference to Exhibit A to the Registrant’s Proxy Statement filed June 13, 2016).

31.1

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities Exchange Act of 1934, as amended (filed herewith to Exhibit 31.1 of the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2016, Commission File No. 000-28827).

31.2

Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under the Securities Exchange Act of 1934, as amended (filed herewith to Exhibit 31.2 of the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2016, Commission File No. 000-28827).

32.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith to Exhibit 32.1 of the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2016, Commission File No. 000-28827).

signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PETMED EXPRESS, INC.
(The “Registrant”)

Date: November 1, 2016

By:	/s/ Menderes Akdag
	Menderes Akdag

	Chief Executive Officer and President
	(principal executive officer)

By:	/s/ Bruce S. Rosenbloom
	Bruce S. Rosenbloom

	Chief Financial Officer
	(principal financial and accounting officer)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

PETMED EXPRESS, INC

FORM 10-Q

FOR THE QUARTER ENDED:

SEPTEMBER 30, 2016

EXHIBITS

EXHIBIT INDEX

Exhibit Number	Description	Number of Pages in Original Document		Incorporated By Reference

10.13	2016 Employee Equity Compensation Restricted Stock Plan		6	**

31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		1	**

31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		1	**

32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		1	**

** Filed herewith

(1) Incorporated by reference to Exhibit A to the Registrant’s Proxy Statement filed June 13, 2016

EX-10.13 2 t1600684_ex10-13.htm EXHIBIT 10.13

Exhibit 10.13

EXHIBIT A

PETMED EXPRESS, INC.

2016 EMPLOYEE EQUITY COMPENSATION

RESTRICTED STOCK PLAN

1. PURPOSE OF PLAN

The purpose of the PetMed Express, Inc. 2016 Restricted Stock Plan (the "2016 Plan"), which is being established by PetMed Express, Inc. on behalf of itself, its subsidiaries and affiliates (collectively, the "Company"), is to secure and retain employees of outstanding ability and to provide additional motivation to such employees to exert their best efforts on behalf of the Company. The Company expects that it will benefit from the added commitment which such employees will have in the welfare of the Company as a result of their ownership or increased ownership of the Company's Common Stock.

2. STOCK SUBJECT TO THE 2016 PLAN

The shares that may be awarded under the 2016 Plan (without payment by participants) shall be the common stock, par value $.001 per share, of the Company (“Common Stock”), and shall be authorized, but un-issued, shares. The maximum number of shares of Common Stock that may be awarded hereunder (subject to any adjustments as provided below) shall not in the aggregate exceed 1,000,000 shares. Shares of Common Stock forfeited as a result of a participant's termination of employment shall again become available for award under the 2016 Plan.

3. ADMINISTRATION

The 2016 Plan shall be administered by the Compensation Committee of the Board of Directors, each of whom is a "non-employee director" as defined in Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Committee"). No member of the Committee shall be eligible to participate in the 2016 Plan.

The Committee shall have the sole authority to (i) award shares of Common Stock (“Restricted Stock”) under the 2016 Plan; (ii) consistent with the 2016 Plan, determine the provisions of the shares to be awarded, the restrictions and other terms and conditions applicable to each award of shares under the 2016 Plan; (iii) interpret the 2016 Plan, the instruments evidencing the restrictions imposed upon stock awarded under the 2016 Plan and the shares awarded under the 2016 Plan; (iv) adopt, amend and rescind rules and regulations for the administration of the 2016 Plan; and (v) generally administer the 2016 Plan and make all determinations in connection therewith which may be necessary or advisable, and all such actions of the Committee shall be binding upon all participants. Committee decisions and selections shall be made by a majority of its members present at the meeting at which a quorum is present, and shall be final. Any decision or selection reduced to writing and signed by all of the members of the Committee shall be as fully effective as if it had been made at a meeting duly held.

4. ELIGIBILITY

All employees, including officers, of the Company who are, from time to time, responsible for the management, growth and protection of the business of the Company shall be eligible for awards of stock under the 2016 Plan. No member of the Board of Directors of the Company shall be eligible to participate in the 2016 Plan unless such director is also an employee of the Company. The employees who shall receive awards under the 2016 Plan shall be selected from time to time by the Committee in its sole discretion, from among those eligible, and the Committee shall determine, in its sole discretion, the number of shares to be awarded to each such employee selected. The Committee may, within the terms of the 2016 Plan, be selective and non-uniform with respect to its determination of the amount of awards and the eligible employees to whom such awards are made.

5. RIGHTS WITH RESPECT TO SHARES

A participant to whom an award of Restricted Stock has been made under the 2016 Plan will have all of the rights of a stockholder with respect to the shares of Common Stock so awarded, including, but not limited to, the right to receive, subject to the following sentence, such cash dividends, if any, as may be declared on such shares from time to time and the right to vote (in person or by proxy) such shares at any meeting of the Company’s stockholders. As a condition to the grant of the award under the 2016 Plan, and without limiting the provisions of Section 7(b) hereof, dividends, if any, as may be declared on such shares of Common Stock shall be deposited into an escrow or similarly segregated account, and disbursement of such dividends to the participant will occur only upon the delivery of the shares of Common Stock to which such dividends relate, and in the event the shares of Common Stock to which such dividends relate are forfeited, the participant’s right to receive disbursement of such dividends will be forfeited and the amount of the dividends shall be returned to the Company.

6. INVESTMENT REPRESENTATION

If the shares of Common Stock that have been awarded to an employee pursuant to the terms of the 2016 Plan are not registered under the Securities Act of 1933, as amended, pursuant to an exemption from registration, such employee, if the Committee shall deem it advisable, may be required to represent and agree in writing (i) that any shares of Common Stock acquired by such employee pursuant to the 2016 Plan will not be sold except pursuant to an effective registration statement under the Securities Act of 1933, as amended, or pursuant to an exemption from registration under such Act, and (ii) that such employee has acquired such shares of Common Stock for the participant’s own account and not with a view to the distribution thereof.

7. RESTRICTIONS

(a) Terms, Conditions and Restrictions. In addition to such other terms, conditions and restrictions as may be imposed by the Committee and contained in the instrument under which awards of Common Stock are made pursuant to the 2016 Plan, (i) no Common Stock so awarded shall be restricted for a period (the "Restriction Period") of less than one year or more than ten years unless otherwise specified by the Committee; and (ii) except as provided in paragraph (e) below, the recipient of the award shall remain in the employ of the Company during the Restriction Period or otherwise forfeit all right, title and interest in and to the shares subject to such restrictions.

(b) Transferability Restriction. No share awarded under the 2016 Plan shall be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of during the Restriction Period applicable thereto.

(c) Agreements; Stock Legend. As a condition to the grant of an award under the 2016 Plan, each eligible employee selected to participate shall execute and deliver to the Company an agreement in form and substance satisfactory to the Committee reflecting the conditions and restrictions imposed upon the Common Stock awarded. Certificates for shares of Common Stock delivered pursuant to such awards may, if the Committee so determines, bear a legend referring to the restrictions and the instruments to which such awards are subject.

(d) Additional Conditions. In the agreements evidencing awards or otherwise, the Committee may impose such other and additional terms, conditions and restrictions upon the award as it, in its discretion, deems appropriate including, without limitation, that the Company shall have the right to deduct from payments of any kind due to the participant, any federal, state or local taxes of any kind required by law to be withheld with respect to the shares awarded.

(e) Lapse of Restrictions. The restrictions imposed under paragraph (a) above shall terminate with respect to the shares of Common Stock to which they apply on the earliest to occur of the following, unless otherwise specified by the Committee:

(i)

the expiration of the Restriction Period;

(ii)

the participant's total and permanent disability; or

(iii)

the participant's death.

Certificates for shares of Common Stock with respect to which restrictions have lapsed as provided above shall, upon lapse thereof, be released from escrow and delivered to the participant or, in the event of participant's death, to participant's personal representative. Any stock legend referring to the restrictions imposed hereunder shall thereupon be removed.

(f) Change of Control of the Company. Upon the occurrence of a Change of Control, unless otherwise specifically prohibited under applicable laws or by the rules and regulations of any governing governmental agencies or national securities exchanges, or unless the Committee shall determine otherwise, any Restriction Period and restrictions imposed on Restricted Stock shall terminate.

For purposes of the 2016 Plan, a "Change in Control" of the Company shall be deemed to have occurred if:

(a) any person, as such term is used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended, becomes a beneficial owner (within the meaning of Rule 13d-3 under such Act) of 20% or more of the Company's outstanding Common Stock;

(b) there occurs within any period of two consecutive years any change in the directors of the Company such that the members of the Company's Board of Directors prior to such change do not constitute a majority of the directors after giving effect to all changes during such two-year period unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; or

(c) the Company is merged, consolidated or reorganized into or with, or sells all or substantially all of its assets to, another company or other entity, and immediately after such transaction less than 80% of the voting power of the then-outstanding securities of such company or other entity immediately after such transaction is held in the aggregate by holders of the Company's Common Stock immediately before such transaction.

In addition, if the Company enters into an agreement or series of agreements or the Board of Directors of the Company adopts a resolution which results in the occurrence of any of the foregoing events, and the employment of a participant is terminated after and as the sole result of the entering into of such agreement or series of agreements or the adoption of such resolution then, upon the occurrence of any of the events described above, a Change in Control shall be deemed to have retroactively occurred on the date of entering into of the earliest of such agreements or the adoption of such resolution and the participants shall be entitled to the delivery as of such date of any forfeited Restricted Stock.

8. MISCELLANEOUS

(a) No Right to Receive Award. Nothing in the 2016 Plan shall be construed to give any employee of the Company any right to receive an award under the 2016 Plan.

(b) Additional Shares Received With Respect to Restricted Stock. Any shares of Common Stock or other securities of the Company received by an employee as a stock dividend on, or as a result of stock splits, combinations, exchanges of shares, reorganizations, mergers, consolidations or otherwise with respect to shares of Common Stock received pursuant to an award hereunder shall have the same status, be subject to the same restrictions and bear the same legend, if any, as the shares received pursuant to the original award.

(c) Certificates for Shares. Shares of Restricted Stock granted under the 2016 Plan shall be evidenced by certificates. Certificates representing the Restricted Stock shall be registered in the name of the participant, such certificates shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such shares and the Company shall retain physical possession of the certificate in escrow until all restrictions have been lifted or requirements met.

(d) No Effect on Employment Rights. Nothing in the 2016 Plan or in the instruments evidencing the grant of an award hereunder shall in any manner be construed to limit in any way the right of the Company or a subsidiary to terminate an employee's employment at any time, or give any right to an employee to remain employed by the Company.

(e) Governing Law. All provisions of the 2016 Plan shall be construed in accordance with the laws of Florida except to the extent preempted by federal law.

(f) No Restriction on Corporate Action. Nothing contained in the 2016 Plan shall be construed to prevent the Company or any subsidiary from taking any corporate action that is deemed by the Company or such subsidiary to be appropriate or in the best interest, whether or not such action would have an adverse effect on the 2016 Plan or any shares of Common Stock granted under the 2016 Plan. No employee, non-employee director, beneficiary or other person shall have any claim against the Company or any subsidiary as a result of any such action.

9. EFFECTIVE DATE OF 2016 PLAN

The 2016 Plan shall become effective when approved by the Shareholders of the Company.

10. AMENDMENTS

The Committee may amend or terminate the 2016 Plan without shareholder approval unless shareholder approval is required by any federal or state law or regulation or the rules of The Nasdaq Stock Market. The Committee shall not have the right to amend the 2016 Plan to:

(i)

except as provided in paragraph 8(b) of the 2016 Plan, increase the maximum number of shares reserved for purposes of the 2016 Plan;

(ii)

extend the duration of the 2016 Plan; or

(iii)

materially increase the benefits accruing to participants under the 2016 Plan.

Any amendment or alteration which impairs the rights of any participant during the Restriction Period is not effective unless written consent from the participant is obtained.

11. DURATION AND TERMINATION

This 2016 Plan shall terminate, and no further stock shall be awarded hereunder, after July 29, 2026. In addition, the Committee may terminate the 2016 Plan at any time prior thereto. The termination of this 2016 Plan shall not, however, affect any restriction previously imposed or restricted stock awarded pursuant to this 2016 Plan.

12. COMPLIANCE WITH SECTION 16(B)

The 2016 Plan is intended to comply with all applicable conditions of Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended. All transactions involving the Company's executive officers are subject to such conditions, regardless of whether the conditions are expressly set forth in the 2016 Plan. Any provision of the 2016 Plan that is contrary to a condition of Rule 16b-3 shall not apply to executive officers of the Company.

FORM OF RESTRICTED STOCK AGREEMENT PURSUANT TO

PETMED EXPRESS, INC. 2016 RESTRICTED STOCK PLAN

THIS RESTRICTED STOCK AGREEMENT is made this _____ day of _________, _____ by and between ________________________ (the "Participant") and PetMed Express, Inc., a Florida corporation, on behalf of itself, its subsidiaries and affiliates (collectively, the "Company") pursuant to the Company's 2016 Restricted Stock Plan (the "2016 Plan").

WHEREAS, the Compensation Committee (the "Committee") of the Board of Directors of the Company at its meeting on __________ authorized and directed the Company to make an award of stock to the Participant under the 2016 Plan for the purposes expressed in the 2016 Plan;

NOW THEREFORE, in consideration of the foregoing and the mutual undertakings herein contained, the parties agree as follows:

1. Grant of Stock. In accordance with the terms of the 2016 Plan and subject to the further terms, conditions and restrictions contained in this Agreement, the Company hereby grants to the Participant ______ shares (the "Shares") of the Company's common stock, par value $.001 per share (the "Common Stock"). As long as the Shares are subject to the Restrictions set forth in Section 4 of this Agreement, such shares shall be deemed to be, and are referred to in this Agreement as, the "Restricted Shares."

2. Certificates for Shares. Certificates evidencing Restricted Stock shall be deposited with the Company to be held in escrow until such Shares are released to the Participant or forfeited in accordance with this Agreement. The Participant shall, simultaneously with the delivery of this Agreement, deliver to the Company a stock power, in blank, executed by the Participant. If any Restricted Stock is forfeited, the Company shall direct the transfer agent of the Common Stock to make the appropriate entries in its records showing the cancellation of the certificate or certificates for such Restricted Stock and to return the Shares represented thereby to the Company's treasury.

3. Adjustments in Restricted Stock. In the event of any change in the outstanding Common Stock by reason of a stock dividend or distribution, recapitalization, merger, consolidation, split-up, combination, exchange of shares or the like, the Committee shall make equitable adjustments in the Restricted Stock corresponding to adjustments made by the Committee in the number and class of shares of Common Stock which may be issued under the 2016 Plan. Any new, additional or different securities to which the Participant shall be entitled in respect of Restricted Stock by reason of such adjustment shall be deemed to be Restricted Stock and shall be subject to the same terms, conditions, and restrictions as the Restricted Stock so adjusted.

4. Restrictions. During applicable periods of restriction determined in accordance with Section 6 of this Agreement, Restricted Stock and all rights with respect to such Stock, may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered or disposed of and shall be subject to the risk of forfeiture contained in Section 5 of this Agreement (such limitations on transferability and risk of forfeiture being herein referred to as "Restrictions"), but the Participant shall have all other rights of a stockholder, including, but not limited to, the right to vote and receive dividends on Restricted Stock, subject to any dividend to be held in escrow pursuant to the terms of the 2016 Plan.

5. Forfeiture of Restricted Stock. In the event that the Participant terminates employment with the Company for any reason other than his or her death or permanent disability, such event shall constitute an "Event of Forfeiture" and all Shares which at that time are Restricted Stock shall thereupon be forfeited by the Participant to the Company without payment of any consideration by the Company, and neither the Participant nor any successor, heir, assign or personal representative of the Participant shall have any right, title or interest in or to such Restricted Stock or the certificates evidencing them.

6. Lapse of Restrictions. (a) Except as provided in subsection (b) below, the Restrictions on the Restricted Stock granted under this Agreement shall lapse ratably on each of the anniversaries of the date of this Agreement in accordance with the following schedule:

[INSERT TABLE]

(b) In the event that a Participant's employment with the Company terminates as a result of his or her death or permanent disability, the Restrictions shall lapse on the Restricted Stock (if not already lapsed pursuant to subsection (a) above) on the date of such event.

Upon lapse of the Restrictions in accordance with this Section, the Company shall, as soon as practicable thereafter, deliver to the Participant, or to the Participant's personal representative, an unrestricted certificate for the Shares with respect to which such Restrictions have lapsed.

(c) In the event of a change in control, as defined in the 2016 Plan, any Restriction Period and restrictions imposed on Restricted Stock shall lapse.

7. Withholding Requirements. The Company shall have the right to withhold from sums due to the Participant, or to require the Participant to remit to the Company in an amount sufficient to satisfy any Federal, state or local withholding tax requirements prior to making such payments or delivering any certificate evidencing such Shares.

8. Effect of Employment. Nothing contained in this Agreement shall confer upon the Participant the right to continue in the employment of the Company or affect any right which the Company may have to terminate the employment of the Participant.

9. Amendment. This Agreement may not be amended except with the consent of the Committee and by a written instrument duly executed by the Participant and the Company.

10. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their heirs, personal representatives, successors and assigns. Participant acknowledges receipt of a copy of the 2016 Plan, which is annexed hereto, represents that he or she is familiar with the terms and provisions thereof and accepts the award of Shares hereunder subject to all of the terms and conditions thereof and of this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions arising under the 2016 Plan or this Agreement.

IN WITNESS WHEREOF, the Company and the Participant have each executed and delivered this Agreement as of the date first above written.

COMPANY:


Chief Executive Officer

PARTICIPANT:

EX-31.1 3 t1600684_ex31-1.htm EXHIBIT 31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

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

I, Menderes Akdag, certify that:

I have reviewed this report on Form 10-Q for the quarter ended September 30, 2016 of PetMed Express, Inc.;

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;

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;

The registrant’s other certifying officers 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

The registrant’s other certifying officers 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.

	November 1, 2016

	By:	/s/ Menderes Akdag
	Menderes Akdag
	Chief Executive Officer and President

EX-31.2 4 t1600684_ex31-2.htm EXHIBIT 31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

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

I, Bruce S. Rosenbloom, certify that:

I have reviewed this report on Form 10-Q for the quarter ended September 30, 2016 of PetMed Express, Inc.;

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.

	November 1, 2016

	By:	/s/ Bruce S. Rosenbloom
	Bruce S. Rosenbloom
	Chief Financial Officer

EX-32.1 5 t1600684_ex32-1.htm EXHIBIT 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 report on Form 10-Q for the quarter ended September 30, 2016 (the “Report”) of 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: November 1, 2016

	By:	/s/ Menderes Akdag
	Menderes Akdag
	Chief Executive Officer and President

	By:	/s/ Bruce S. Rosenbloom
	Bruce S. Rosenbloom
	Chief Financial Officer

EX-101.INS 6 pets-20160930.xml XBRL INSTANCE DOCUMENT 0001040130 2015-07-01 2015-09-30 0001040130 pets:EmployeeAndDirectorPlansMember us-gaap:RestrictedStockMember us-gaap:GeneralAndAdministrativeExpenseMember 2015-07-01 2015-09-30 0001040130 2015-04-01 2015-09-30 0001040130 pets:EmployeeAndDirectorPlansMember us-gaap:RestrictedStockMember us-gaap:GeneralAndAdministrativeExpenseMember 2015-04-01 2015-09-30 0001040130 pets:EmployeeAndDirectorPlansMember us-gaap:RestrictedStockMember us-gaap:GeneralAndAdministrativeExpenseMember 2015-09-30 0001040130 pets:EmployeeAndDirectorPlansMember us-gaap:RestrictedStockMember 2015-09-30 0001040130 2015-12-22 0001040130 us-gaap:BuildingMember 2015-12-22 0001040130 2016-03-31 0001040130 us-gaap:ConvertiblePreferredStockMember 2016-03-31 0001040130 pets:OutsideDirectorEquityCompensationPlanMember us-gaap:RestrictedStockMember 2016-07-31 0001040130 pets:OutsideDirectorEquityCompensationRestrictedStock2015PlanMember us-gaap:RestrictedStockMember 2016-07-31 0001040130 2016-07-01 2016-09-30 0001040130 pets:EmployeeAndDirectorPlansMember us-gaap:RestrictedStockMember us-gaap:GeneralAndAdministrativeExpenseMember 2016-07-01 2016-09-30 0001040130 2016-04-01 2016-09-30 0001040130 pets:EmployeeAndDirectorPlansMember us-gaap:RestrictedStockMember us-gaap:GeneralAndAdministrativeExpenseMember 2016-04-01 2016-09-30 0001040130 pets:OutsideDirectorEquityCompensationRestrictedStock2015PlanMember us-gaap:CommonStockMember 2016-04-01 2016-09-30 0001040130 us-gaap:BuildingMember 2016-04-01 2016-09-30 0001040130 pets:OutsideDirectorEquityCompensationPlanMember us-gaap:RestrictedStockMember 2016-04-01 2016-09-30 0001040130 pets:EmployeeEquityCompensationPlanMember us-gaap:RestrictedStockMember 2016-04-01 2016-09-30 0001040130 us-gaap:RetainedEarningsMember 2016-04-01 2016-09-30 0001040130 us-gaap:AdditionalPaidInCapitalMember 2016-04-01 2016-09-30 0001040130 pets:EmployeeAndDirectorPlansMember us-gaap:RestrictedStockMember 2016-04-01 2016-09-30 0001040130 us-gaap:MaximumMember 2016-04-01 2016-09-30 0001040130 us-gaap:MinimumMember 2016-04-01 2016-09-30 0001040130 pets:EmployeeEquityCompensationRestrictedStock2016PlanMember us-gaap:RestrictedStockMember 2016-04-01 2016-09-30 0001040130 2016-09-30 0001040130 pets:EmployeeAndDirectorPlansMember us-gaap:RestrictedStockMember us-gaap:GeneralAndAdministrativeExpenseMember 2016-09-30 0001040130 us-gaap:ConvertiblePreferredStockMember 2016-09-30 0001040130 pets:EmployeeAndDirectorPlansMember us-gaap:RestrictedStockMember 2016-09-30 0001040130 us-gaap:SubsequentEventMember 2016-10-24 0001040130 us-gaap:SubsequentEventMember 2016-10-01 2016-10-24 0001040130 2016-11-01 0001040130 2015-03-31 0001040130 2015-09-30 0001040130 us-gaap:RetainedEarningsMember 2016-03-31 0001040130 us-gaap:RetainedEarningsMember 2016-09-30 0001040130 us-gaap:AdditionalPaidInCapitalMember 2016-03-31 0001040130 us-gaap:AdditionalPaidInCapitalMember 2016-09-30 xbrli:shares iso4217:USD iso4217:USDxbrli:shares utr:sqft utr:acre pets:Building xbrli:pure PETMED EXPRESS INC 0001040130 pets --03-31 Accelerated Filer 20526525 10-Q 2016-09-30 false 2016 Q2

37639000

51896000

35613000

42180000

1724000

1369000

25586000

14820000

2435000

6486000

243000

21000

67627000

74592000

20929000

20576000

860000

863000

499000

22652000

21935000

90279000

96527000

5004000

6147000

2080000 2416000

7084000

8563000

9000

20000

21000

4871000

5932000

78295000

82002000

83195000

87964000

78295000

82002000

4871000

5932000

90279000

96527000

13000

10000

0.001

5000

0.001

40000

20447

20527

20447

20527

56725000

128359000

60791000

133278000

37812000

86480000

42727000

92762000

18913000

41879000

18064000

40516000

5388000

11187000

5747000

11845000

6249000

14134000

4382000

10142000

186000

377000

204000

398000

11823000

25698000

10333000

22385000

7090000

16181000

7731000

18131000

55000

105000

32000

60000

-4000

-8000

23000

76000

51000

97000

55000

136000

7141000

16278000

7786000

18267000

2639000

6019000

2887000

6774000

4502000

10259000

4899000

11493000

16000

-19000

4518000

10240000

4899000

11493000

0.22

0.51

0.24

0.57

0.22

0.51

0.24

0.56

20126

20100

20234

20208

20246

20222

20377

20355

0.18

0.36

0.19

0.38

777000

946000

4000

364000

227000

352000

-81000

-3000

-664000

-10765000

60000

-222000

86000

-1764000

2125000

1143000

-50000

-277000

335000

14041000

27785000

33000

175000

5859000

-208000

-5859000

7358000

7784000

-7266000

-7669000

6567000

14257000

6033000

6186000

5815000

154000

144000

<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Note 1: Summary of Significant Accounting Policies <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Organization <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">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 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. The majority of the Company’s sales are to residents in the United States. The Company’s corporate headquarters and distribution facility are located in Pompano Beach, Florida. In the third quarter of fiscal 2017, we plan on relocating the corporate headquarters and distribution facility to Delray Beach, Florida. The Company’s fiscal year end is March 31, and references herein to Fiscal 2017 or Fiscal 2016 refer to the Company's fiscal years ending March 31, 2017 and 2016, respectively. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Basis of Presentation and Consolidation <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company at September 30, 2016, the Statements of Comprehensive Income for the three and six months ended September 30, 2016 and 2015, and Cash Flows for the six months ended September 30, 2016 and 2015. The results of operations for the three and six months ended September 30, 2016 are not necessarily indicative of the operating results expected for the fiscal year ending March 31, 2017. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2016. The Condensed Consolidated Financial Statements include the accounts of PetMed Express, Inc. and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated upon consolidation. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Use of Estimates <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">The preparation of Condensed 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 Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Fair Value of Financial Instruments <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">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. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Recent Accounting Pronouncements <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">On March 30, 2016, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update on Stock Compensation Improvements to Employee Share-Based Payment Accounting (Topic 718). The objective of this update is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The update becomes effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">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.

<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Note 2: Net Income Per Share <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">In accordance with the provisions of Accounting Standards Codification (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 the diluted weighted average shares outstanding. <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.25in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">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): <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 100%; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-left: 0.25in; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">Three Months Ended  September 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">Six Months Ended  September 30,</td> <td style="font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">2016</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">2015</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">2016</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">2015</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in;">Net income (numerator):</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="width: 812.4px; text-align: left; text-indent: -0.1in; padding-bottom: 4px; padding-left: 16.2pt;">Net income</td> <td style="width: 15px; padding-bottom: 4px;"> </td> <td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="width: 120px; text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">4,899</td> <td style="width: 15px; text-align: left; padding-bottom: 4px;"> </td> <td style="width: 15px; padding-bottom: 4px;"> </td> <td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="width: 120px; text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">4,502</td> <td style="width: 15px; text-align: left; padding-bottom: 4px;"> </td> <td style="width: 15px; padding-bottom: 4px;"> </td> <td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="width: 119px; text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">11,493</td> <td style="width: 14px; text-align: left; padding-bottom: 4px;"> </td> <td style="width: 14px; padding-bottom: 4px;"> </td> <td style="width: 14px; text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="width: 119px; text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">10,259</td> <td style="width: 14px; text-align: left; padding-bottom: 4px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-indent: -0.1in; padding-left: 0.1in;">Shares (denominator):</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 16.2pt;">Weighted average number of common shares outstanding used in basic computation</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">20,234</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">20,126</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">20,208</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">20,100</td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 16.2pt;">Common shares issuable upon vesting of restricted stock</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">133</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">110</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">137</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">112</td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left; text-indent: -0.1in; padding-bottom: 2px; padding-left: 16.2pt;">Common shares issuable upon conversion of preferred shares</td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">10</td> <td style="text-align: left; padding-bottom: 2px;"> </td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">10</td> <td style="text-align: left; padding-bottom: 2px;"> </td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">10</td> <td style="text-align: left; padding-bottom: 2px;"> </td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">10</td> <td style="text-align: left; padding-bottom: 2px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-align: left; text-indent: -0.1in; padding-bottom: 4px; padding-left: 16.2pt;">Shares used in diluted computation</td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">20,377</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">20,246</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">20,355</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">20,222</td> <td style="text-align: left; padding-bottom: 4px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-indent: -0.1in; padding-left: 0.1in;">Net income per common share:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-indent: -0.1in; padding-bottom: 4px; padding-left: 16.2pt;">Basic</td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.24</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.22</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.57</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.51</td> <td style="text-align: left; padding-bottom: 4px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-indent: -0.1in; padding-bottom: 4px; padding-left: 16.2pt;">Diluted</td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.24</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.22</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.56</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.51</td> <td style="text-align: left; padding-bottom: 4px;"> </td> </tr> </table> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">  <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">For the three and six months ended September 30, 2016, 30,000 shares of common restricted stock 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. All other common restricted stock was included in the diluted net income per common share computation for the three and six months ended September 30, 2015.

<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 100%; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-left: 0in; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">Three Months Ended  September 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">Six Months Ended  September 30,</td> <td style="font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">2016</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">2015</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">2016</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">2015</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in;">Net income (numerator):</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="width: 812.4px; text-align: left; text-indent: -0.1in; padding-bottom: 4px; padding-left: 16.2pt;">Net income</td> <td style="width: 15px; padding-bottom: 4px;"> </td> <td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="width: 120px; text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">4,899</td> <td style="width: 15px; text-align: left; padding-bottom: 4px;"> </td> <td style="width: 15px; padding-bottom: 4px;"> </td> <td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="width: 120px; text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">4,502</td> <td style="width: 15px; text-align: left; padding-bottom: 4px;"> </td> <td style="width: 15px; padding-bottom: 4px;"> </td> <td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="width: 119px; text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">11,493</td> <td style="width: 14px; text-align: left; padding-bottom: 4px;"> </td> <td style="width: 14px; padding-bottom: 4px;"> </td> <td style="width: 14px; text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="width: 119px; text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">10,259</td> <td style="width: 14px; text-align: left; padding-bottom: 4px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-indent: -0.1in; padding-left: 0.1in;">Shares (denominator):</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 16.2pt;">Weighted average number of common shares outstanding used in basic computation</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">20,234</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">20,126</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">20,208</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">20,100</td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-align: left; text-indent: -0.1in; padding-left: 16.2pt;">Common shares issuable upon vesting of restricted stock</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">133</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">110</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">137</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">112</td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left; text-indent: -0.1in; padding-bottom: 2px; padding-left: 16.2pt;">Common shares issuable upon conversion of preferred shares</td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">10</td> <td style="text-align: left; padding-bottom: 2px;"> </td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">10</td> <td style="text-align: left; padding-bottom: 2px;"> </td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">10</td> <td style="text-align: left; padding-bottom: 2px;"> </td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">10</td> <td style="text-align: left; padding-bottom: 2px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-align: left; text-indent: -0.1in; padding-bottom: 4px; padding-left: 16.2pt;">Shares used in diluted computation</td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">20,377</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">20,246</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">20,355</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">20,222</td> <td style="text-align: left; padding-bottom: 4px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-indent: -0.1in; padding-left: 0.1in;">Net income per common share:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-indent: -0.1in; padding-bottom: 4px; padding-left: 16.2pt;">Basic</td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.24</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.22</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.57</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.51</td> <td style="text-align: left; padding-bottom: 4px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-indent: -0.1in; padding-bottom: 4px; padding-left: 16.2pt;">Diluted</td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.24</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.22</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.56</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">0.51</td> <td style="text-align: left; padding-bottom: 4px;"> </td> </tr> </table>

<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 100%; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Additional</td> <td style="font-weight: bold;"> </td> <td> </td> <td colspan="2" nowrap="nowrap"> </td> <td> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Paid-In</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Retained</td> <td style="font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">Capital</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> <td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2" nowrap="nowrap">Earnings</td> <td style="padding-bottom: 2px; font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2" nowrap="nowrap"> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap"> </td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="width: 878px;">Beginning balance at March 31, 2016:</td> <td style="width: 13px;"> </td> <td style="width: 13px; text-align: left;">$</td> <td style="width: 151px; text-align: right;">4,871</td> <td style="width: 12px; text-align: left;"> </td> <td style="width: 12px;"> </td> <td style="width: 12px; text-align: left;">$</td> <td style="width: 150px; text-align: right;">78,295</td> <td style="width: 12px; text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-left: 9pt;">Share based compensation</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">946</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-align: left; padding-left: 9pt;">Dividends declared</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(7,786</td> <td style="text-align: left;">)</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left; padding-left: 9pt;">Excess tax benefits related to restricted stock</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">115</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="text-align: left; padding-left: 9pt;">Net income</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">11,493</td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 2px;"> </td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: left; padding-bottom: 2px;"> </td> <td style="padding-bottom: 2px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td> <td style="text-align: left; padding-bottom: 2px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: azure;"> <td style="padding-bottom: 4px;">Ending balance at September 30, 2016:</td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">5,932</td> <td style="text-align: left; padding-bottom: 4px;"> </td> <td style="padding-bottom: 4px;"> </td> <td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td> <td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">82,002</td> <td style="text-align: left; padding-bottom: 4px;"> </td> </tr> </table>

110

112

133

137

30000

272000

977879

1000000

P3Y

406000

777000

483000

946000

2400000

4300000

186000

273000

50000

30000

18500000

634000

185000

5800000

P30Y

P7Y

P3Y

946000

-7786000

0.370

0.371

0.19

3900000

2016-11-18

2016-11-07

-92000

-115000

115000

19.60

20.73

97000

30000

14.6

2016-10-24

EX-101.SCH 7 pets-20160930.xsd XBRL TAXONOMY EXTENSION SCHEMA 001 - Document - Document and Entity Information link:presentationLink link:definitionLink link:calculationLink 002 - Statement - CONDENSED CONSOLIDATED BALANCE SHEETS link:presentationLink link:definitionLink link:calculationLink 003 - Statement - CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) link:presentationLink link:definitionLink link:calculationLink 004 - Statement - CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) link:presentationLink link:definitionLink link:calculationLink 005 - Statement - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) link:presentationLink link:definitionLink link:calculationLink 006 - Disclosure - Summary of Significant Accounting Policies link:presentationLink link:definitionLink link:calculationLink 007 - Disclosure - Net Income Per Share link:presentationLink link:definitionLink link:calculationLink 008 - Disclosure - Accounting for Stock-Based Compensation link:presentationLink link:definitionLink link:calculationLink 009 - Disclosure - Property and Equipment link:presentationLink link:definitionLink link:calculationLink 010 - Disclosure - Fair Value link:presentationLink link:definitionLink link:calculationLink 011 - Disclosure - Commitments and Contingencies link:presentationLink link:definitionLink link:calculationLink 012 - Disclosure - Changes in Shareholders' Equity and Comprehensive Income link:presentationLink link:definitionLink link:calculationLink 013 - Disclosure - Income Taxes link:presentationLink link:definitionLink link:calculationLink 014 - Disclosure - Subsequent Events link:presentationLink link:definitionLink link:calculationLink 015 - Disclosure - Summary of Significant Accounting Policies (Policies) link:presentationLink link:definitionLink link:calculationLink 016 - Disclosure - Net Income Per Share (Tables) link:presentationLink link:definitionLink link:calculationLink 017 - Disclosure - Changes in Shareholders' Equity and Comprehensive Income: (Tables) link:presentationLink link:definitionLink link:calculationLink 018 - Disclosure - Net Income Per Share - Reconciliation of the numerators and denominators of the basic and diluted net income per share computations (Details) link:presentationLink link:definitionLink link:calculationLink 020 - Disclosure - Accounting for Stock-Based Compensation (Detail Textuals) link:presentationLink link:definitionLink link:calculationLink 021 - Disclosure - Property and Equipment Fair Value (Detail Textuals) link:presentationLink link:definitionLink link:calculationLink 022 - Disclosure - Fair Value (Detail Textuals) link:presentationLink link:definitionLink link:calculationLink 023 - Disclosure - Changes in Shareholders' Equity and Comprehensive Income: (Details) link:presentationLink link:definitionLink link:calculationLink 024 - Disclosure - Income Taxes (Detail Textuals) link:presentationLink link:definitionLink link:calculationLink 025 - Disclosure - Subsequent Events (Detail Textuals) link:presentationLink link:definitionLink link:calculationLink 019 - Disclosure - Net Income Per Share (Detail textuals) link:presentationLink link:definitionLink link:calculationLink EX-101.CAL 8 pets-20160930_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.DEF 9 pets-20160930_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE EX-101.LAB 10 pets-20160930_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE Document and Entity Information [Abstract] Document and Entity Information [Abstract] Entity Registrant Name Entity Registrant Name Entity Central Index Key Entity Central Index Key Trading Symbol Trading Symbol Current Fiscal Year End Date Current Fiscal Year End Date Entity Filer Category Entity Filer Category Entity Common Stock, Shares Outstanding Entity Common Stock, Shares Outstanding Document Type Document Type Document Period End Date Document Period End Date Amendment Flag Amendment Flag Document Fiscal Year Focus Document Fiscal Year Focus Document Fiscal Period Focus Document Fiscal Period Focus Statement Of Financial Position [Abstract] Statement of Financial Position [Abstract] Assets [Abstract] ASSETS Assets, Current [Abstract] Current assets: Cash and Cash Equivalents, at Carrying Value Cash and cash equivalents Cash and cash equivalents Cash and cash equivalents, at beginning of period Cash and cash equivalents, at end of period Accounts Receivable, Net, Current Accounts receivable, less allowance for doubtful accounts of $10 and $13, respectively Accounts receivable, less allowance for doubtful accounts of $4 and $6, respectively Inventory, Finished Goods Inventories - finished goods Inventory, Finished Goods, Total Prepaid Expense and Other Assets, Current Prepaid expenses and other current assets Prepaid expenses and other current assets Prepaid Taxes Prepaid income taxes Assets, Current Total current assets Total current assets Assets, Noncurrent [Abstract] Noncurrent assets: Property, Plant and Equipment, Net Property and equipment, net Property and equipment, net Property, Plant and Equipment, Net, Beginning Balance Property, Plant and Equipment, Net, Ending Balance Intangible Assets, Net (Excluding Goodwill) Intangible assets Intangible asset Deferred tax assets Deferred tax assets Assets, Noncurrent Total noncurrent assets Assets Total assets Total assets Liabilities and Equity [Abstract] LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities, Current [Abstract] Current liabilities: Accounts Payable, Current Accounts payable Accounts Payable, Current, Total Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities Accrued expenses and other current liabilities Accrued expenses and other current liabilities Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Liabilities Total liabilities Total liabilities Commitments and Contingencies Commitments and contingencies Stockholders' Equity Attributable To Parent [Abstract] Shareholders' equity: Preferred Stock, Value, Issued Preferred stock, $.001 par value, 5,000 shares authorized; 3 convertible shares issued and outstanding with a liquidation preference of $4 per share Common Stock, Value, Issued Outstanding common stock, value Common stock, $.001 par value, 40,000 shares authorized; 20,527 and 20,447 shares issued and outstanding, respectively Additional Paid in Capital Additional paid-in capital Retained Earnings (Accumulated Deficit) Retained earnings Retained earnings Retained Earnings (Accumulated Deficit), Beginning Balance Retained Earnings (Accumulated Deficit), Ending Balance Stockholders' Equity Attributable to Parent Beginning balance at March 31, 2011: Total shareholders' equity Beginning balance at March 31, 2016: Ending balance at september 30, 2016: Liabilities and Equity Total liabilities and shareholders' equity Total liabilities and shareholders' equity Statement [Table] Statement [Table] Class Of Stock [Axis] Class of Stock [Axis] Class Of Stock [Domain] Class of Stock [Domain] Convertible Preferred Stock [Member] Convertible Convertible Preferred Stock Statement [Line Items] Statement [Line Items] Allowance for Doubtful Accounts Receivable, Current Allowance for doubtful accounts (in dollars) Allowance for Doubtful Accounts Receivable, Current, Beginning Balance Allowance for Doubtful Accounts Receivable, Current, Ending Balance Preferred Stock, Par Or Stated Value Per Share Preferred stock, par value (in dollars per share) Preferred Stock, Shares Authorized Preferred stock, shares authorized Preferred Stock, Shares Issued Number of preferred shares issued Preferred stock, shares issued Preferred Stock, Shares Issued, Total Preferred Stock, Shares Outstanding Number of shares remained unconverted and outstanding Preferred stock, shares outstanding Preferred Stock, Shares Outstanding, Beginning Balance Preferred Stock, Shares Outstanding, Ending Balance Preferred Stock, Liquidation Preference Per Share Liquidation value (in dollars per share) Preferred stock, liquidation preference (in dollars per share) Common Stock, Par Or Stated Value Per Share Common stock, par value (in dollars per share) Common Stock, Shares Authorized Common stock, shares authorized Common Stock, Shares, Issued Common stock, shares issued Common Stock, Shares, Issued, Total Common Stock, Shares, Outstanding Common stock, shares outstanding Common Stock, Shares, Outstanding, Beginning Balance Common Stock, Shares, Outstanding, Ending Balance Income Statement [Abstract] Income Statement [Abstract] Sales Sales Sales Cost Of Goods Sold Cost of sales Cost of sales Gross Profit Gross profit Gross profit Operating Expenses [Abstract] Operating expenses: General and Administrative Expense General and administrative General and administrative Advertising Expense Advertising Depreciation, Total Depreciation Depreciation Operating Expenses Total operating expenses Total operating expenses Income From Operations Income from operations Income from operations Nonoperating Income (Expense) [Abstract] Other income: Investment Income, Interest Interest income, net Other Nonoperating Income (Expense) Other, net Other, net Nonoperating Income (Expense) Total other income (expense) Total other income Income (Loss) From Continuing Operations Before Income Taxes, Extraordinary Items, Noncontrolling Interest Income before provision for income taxes Income before provision for income taxes Income Tax Expense (Benefit) Income tax provision Provision for income taxes Total provision for income taxes Net Income (Loss) Attributable to Parent Net income (in dollars) Net income Net income Net Change in unrealized loss on short term investments Unrealized gain (loss) on short term investments Net change in unrealized gain (loss) on short term investments Net change in unrealized gain (loss) on short term investments Comprehensive Income (Loss), Net Of Tax, Attributable To Parent Total comprehensive income Comprehensive income Earnings Per Share [Abstract] Net income per common share: Earnings Per Share, Basic Basic (in dollars per share) Basic (in dollars per share) Basic Diluted (In Dollars Per Share) Diluted net income per common share (in dollars per share) Diluted (in dollars per share) Diluted Shares (denominator) Shares (denominator) Weighted average number of common shares outstanding: Weighted Average Number Of Shares Outstanding, Basic Weighted average number of common shares outstanding used in basic computation Basic (in shares) Weighted Average Number of Shares Outstanding, Basic, Total Weighted Average Number Of Shares Outstanding, Diluted Diluted (in shares) Shares used in diluted computation Shares used in diluted computation Common Stock, Dividends, Per Share, Declared Cash dividends declared per common share ((in dollars per share)) Statement Of Cash Flows [Abstract] Statement of Cash Flows [Abstract] Net Cash Provided By (Used In) Operating Activities, Continuing Operations [Abstract] Cash flows from operating activities: Adjustments To Reconcile Net Income (Loss) To Cash Provided By (Used In) Operating Activities [Abstract] Adjustments to reconcile net income to net cash provided by operating activities: Share-Based Compensation Compensation expense Share based compensation Share based compensation Deferred Income Tax Expense (Benefit) Deferred income taxes Deferred Income Tax Expense (Benefit), Total Provision for Doubtful Accounts Provision for doubtful accounts Bad debt expense Increase (Decrease) In Operating Capital [Abstract] (Increase) decrease in operating assets and increase (decrease) in liabilities: Increase (Decrease) In Accounts Receivable Accounts receivable Accounts receivable Increase (Decrease) In Finished Goods and Work In Process Inventories Inventories - finished goods Inventories - finished goods Increase (Decrease) In Prepaid Income Taxes Prepaid income taxes Prepaid income taxes Increase (Decrease) In Prepaid Expense and Other Assets Prepaid expenses and other current assets Prepaid expenses and other current assets Prepaid expenses and other current assets Increase (Decrease) In Accounts Payable Accounts payable Accounts payable Increase (Decrease) In Income Taxes Payable Income taxes payable Increase (Decrease) In Accrued Liabilities and Other Current Liabilities Accrued expenses and other current liabilities Accrued expenses and other current liabilities Net Cash Provided By (Used In) Operating Activities, Continuing Operations Net cash provided by operating activities Net cash provided by operating activities Net cash provided by operating activities Net Cash Provided By (Used In) Investing Activities, Continuing Operations [Abstract] Cash flows from investing activities: Payments For (Proceeds From) Investments Net change in investments Net change in investments Net change in investments Payments To Acquire Property, Plant, and Equipment Purchases of property and equipment Purchases of property and equipment Purchases of property and equipment Net Cash Provided By (Used In) Investing Activities, Continuing Operations Net cash provided by (used in) investing activities Net cash used in investing activities Net Cash Provided By (Used In) Financing Activities, Continuing Operations [Abstract] Cash flows from financing activities: Payments Of Dividends, Common Stock Dividends paid Dividends paid Excess Tax Benefit from Share-based Compensation, Operating Activities Excess tax benefits related to restricted stock Excess tax benefits related to restricted stock Net Cash Provided By (Used In) Financing Activities, Continuing Operations Net cash used in financing activities Net cash used in financing activities Net cash used in financing activities Cash and Cash Equivalents, Period Increase (Decrease) Net (decrease) increase in cash and cash equivalents Net increase in cash and cash equivalents Supplemental Cash Flow Information [Abstract] Supplemental disclosure of cash flow information: Income Taxes Paid Cash paid for income taxes Prepaid Property And Equipment In Current Assets Prepaid property and equipment in current assets Represents amount related to prepaid property and equipment in current assets. Liabilities Assumed Dividends payable in accrued expenses Accounting Policies [Abstract] Accounting Policies [Abstract] Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] Summary of Significant Accounting Policies Earnings Per Share [Text Block] Net Income Per Share Disclosure of Compensation Related Costs, Share-based Payments [Abstract] Disclosure of Compensation Related Costs, Share-based Payments [Abstract] Disclosure of Compensation Related Costs, Share-based Payments [Text Block] Accounting for Stock-Based Compensation Restricted Stock Property, Plant and Equipment [Abstract] Property, Plant and Equipment [Abstract] Property, Plant and Equipment Disclosure [Text Block] Property and Equipment Fair Value Disclosures [Abstract] Fair Value Fair Value Disclosures [Text Block] Fair Value Commitments and Contingencies Disclosure [Abstract] Commitments and Contingencies Disclosure [Abstract] Commitments and Contingencies Disclosure [Text Block] Commitments and Contingencies Stockholders' Equity Note [Abstract] Stockholders' Equity Note Disclosure [Text Block] Changes in Shareholders' Equity and Comprehensive Income Shareholders' Equity Income Tax Disclosure [Abstract] Income Tax Disclosure [Abstract] Income Tax Disclosure [Text Block] Income Taxes Subsequent Events [Abstract] Subsequent Events [Abstract] Subsequent Events [Text Block] Subsequent Events Basis Of Presentation And Consolidation [Policy Text Block] Basis of Presentation and Consolidation Disclosure of accounting policy for basis of accounting, or basis of presentation and , used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Also consolidating or combining the separate financial statements, including the principles followed in determining the inclusion or exclusion of subsidiaries or other entities in the consolidated or combined financial statements. Use Of Estimates, Policy [Policy Text Block] Use of Estimates Fair Value Of Financial Instruments, Policy [Policy Text Block] Fair Value of Financial Instruments New Accounting Pronouncements, Policy [Policy Text Block] Recent Accounting Pronouncements Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] Schedule of reconciliation of the numerators and denominators of the basic and diluted net income per share computations Schedule of Stockholders Equity [Table Text Block] Schedule of changes in stockholders' equity Net Income (Loss) Attributable To Parent [Abstract] Net income (numerator): Incremental Common Shares Attributable To Share-Based Payment Arrangements Common shares issuable upon exercise of stock options and vesting of restricted stock Common shares issuable upon vesting of restricted stock Incremental Common Shares Attributable To Conversion Of Preferred Stock Common shares issuable upon conversion of preferred shares Earnings Per Share, Basic and Diluted [Abstract] Net income per common share: Schedule Of Share-Based Compensation Arrangements By Share-Based Payment Award [Table] Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Table] Plan Name [Axis] Plan Name [Axis] Plan Name [Domain] Plan Name [Domain] Employee Equity Compensation Plan [Member] 2006 Employee Equity Compensation Restricted Stock Plan (the "Employee Plan") Employee Plan Equity-based compensation arrangement plan for employees. Outside Director Equity Compensation Plan [Member] 2006 Outside Director Equity Compensation Restricted Stock Plan (the "Director Plan") Director Plan Equity-based compensation arrangement plan for outside directors. Employee And Director Plans [Member] Employee and Director Plans Represents the stock-based compensation arrangement plan wherein restricted common shares issued to the employees and directors. Outside Director Equity Compensation Restricted Stock 2015 Plan [Member] 2015 Outside Director Equity Compensation Restricted Stock Plan ("2015 Director Plan") Represents information about outside director equity compensation restricted stock plan. Employee Equity Compensation Restricted Stock 2016 Plan [Member] 2016 Employee equity compensation restricted stock plan (2016 Employee Plan) It represent information regarding employee equity compensation restricted stock plan. Award Type [Axis] Award Type [Axis] Equity Award [Domain] Award Type [Domain] Restricted Stock [Member] Restricted Stock Common Stock [Member] Common Stock Income Statement Location [Axis] Income Statement Location [Domain] General and Administrative Expense [Member] General and administrative expense Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Stock Issued During Period, Shares, Restricted Stock Award, Gross Restricted common stock, shares issued (in shares) Number of shares of restricted stock granted Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition Unrecognized compensation cost of non-vested restricted stock award, period of recognition Weighted average vesting period Share Based Compensation Arrangement By Share Based Payment Award Restricted Stock Amortization Period Restricted stock, amortization period Represents amortization period of restricted stock. Allocated Share-based Compensation Expense Compensation expense Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options Unrecognized compensation cost related to the non-vested restricted stock awards Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number Non-vested restricted stock shares outstanding Non-vested restricted stock outstanding at March 31, 2015 Non-vested restricted stock outstanding at March 31, 2016 Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized Number of common shares authorized to issue under the plan Number of shares approved for issuance to employees Share Price Fair value price (in dollars per share) Property, Plant and Equipment [Table] Schedule of Property, Plant and Equipment [Table] Property, Plant and Equipment, Type [Axis] Property, Plant and Equipment, Type [Axis] Property, Plant and Equipment, Type [Domain] Property, Plant and Equipment, Type [Domain] Building [Member] Buildings Range [Axis] Range [Domain] Maximum [Member] Maximum Minimum [Member] Minimum Property, Plant and Equipment [Line Items] Property, Plant and Equipment [Line Items] Purchase Price Of Property Acquired Purchase price of property Represents the amount related to purchase price of property acquired. Square Feet Allocated Area Area of corporate headquarters and distribution facility It indicates area of square feet for its corporate headquarters and distribution facility. Area of Land Square feet of land Area of land Area of Real Estate Property Square feet of building Area of building complex Number of Units in Real Estate Property Number of Units in Real Estate Property Leasehold Improvements, Gross Leasehold improvements and equipment Estimated useful life Remaining weighted average lease term Weighted average lease term Equity Components [Axis] Equity Components [Axis] Equity Component [Domain] Equity Component [Domain] Additional Paid-in Capital [Member] Additional paid-in capital Retained Earnings [Member] Retained earnings Increase (Decrease) in Stockholders' Equity [Roll Forward] Increase (Decrease) in Stockholders' Equity [Roll Forward] Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition Share based compensation Dividends, Common Stock Dividends declared Dividends declared Effective Income Tax Rate Reconciliation, Percent Effective tax rate Subsequent Event [Table] Subsequent Event [Table] Subsequent Event Type [Axis] Subsequent Event Type [Axis] Subsequent Event Type [Domain] Subsequent Event Type [Domain] Subsequent Event [Member] Subsequent Event Subsequent Event [Line Items] Subsequent Event [Line Items] Dividends Payable, Date Declared Dividend declaration date Declaration Date Dividends Payable, Amount Per Share Dividend declared (in dollars per share) Quarterly dividend declared (in dollars per share) Per Share Dividend EX-101.PRE 11 pets-20160930_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE XML 12 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Sep. 30, 2016	Nov. 01, 2016
Document and Entity Information [Abstract]
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 Common Stock, Shares Outstanding		20,526,525
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2

XML 13 R2.htm IDEA: XBRL DOCUMENT

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Mar. 31, 2016
Current assets:
Cash and cash equivalents	$ 51,896	$ 37,639
Accounts receivable, less allowance for doubtful accounts of $10 and $13, respectively	1,369	1,724
Inventories - finished goods	14,820	25,586
Prepaid expenses and other current assets	6,486	2,435
Prepaid income taxes	21	243
Total current assets	74,592	67,627
Noncurrent assets:
Property and equipment, net	20,576	20,929
Intangible assets	860	860
Deferred tax assets	499	863
Total noncurrent assets	21,935	22,652
Total assets	96,527	90,279
Current liabilities:
Accounts payable	6,147	5,004
Accrued expenses and other current liabilities	2,416	2,080
Total liabilities	8,563	7,084
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; 20,527 and 20,447 shares issued and outstanding, respectively	21	20
Additional paid-in capital	5,932	4,871
Retained earnings	82,002	78,295
Total shareholders' equity	87,964	83,195
Total liabilities and shareholders' equity	$ 96,527	$ 90,279

XML 14 R3.htm IDEA: XBRL DOCUMENT

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2016	Mar. 31, 2016
Allowance for doubtful accounts (in dollars)	$ 10	$ 13
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000	5,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	40,000	40,000
Common stock, shares issued	20,527	20,447
Common stock, shares outstanding	20,527	20,447
Convertible Preferred Stock
Preferred stock, shares issued	3	3
Preferred stock, shares outstanding	3	3
Preferred stock, liquidation preference (in dollars per share)	$ 4	$ 4

XML 15 R4.htm IDEA: XBRL DOCUMENT

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Sales	$ 60,791	$ 56,725	$ 133,278	$ 128,359
Cost of sales	42,727	37,812	92,762	86,480
Gross profit	18,064	18,913	40,516	41,879
Operating expenses:
General and administrative	5,747	5,388	11,845	11,187
Advertising	4,382	6,249	10,142	14,134
Depreciation	204	186	398	377
Total operating expenses	10,333	11,823	22,385	25,698
Income from operations	7,731	7,090	18,131	16,181
Other income:
Interest income, net	32	55	60	105
Other, net	23	(4)	76	(8)
Total other income	55	51	136	97
Income before provision for income taxes	7,786	7,141	18,267	16,278
Provision for income taxes	2,887	2,639	6,774	6,019
Net income	4,899	4,502	11,493	10,259
Net change in unrealized gain (loss) on short term investments		16		(19)
Comprehensive income	$ 4,899	$ 4,518	$ 11,493	$ 10,240
Net income per common share:
Basic (in dollars per share)	$ 0.24	$ 0.22	$ 0.57	$ 0.51
Diluted (in dollars per share)	$ 0.24	$ 0.22	$ 0.56	$ 0.51
Weighted average number of common shares outstanding:
Basic (in shares)	20,234	20,126	20,208	20,100
Diluted (in shares)	20,377	20,246	20,355	20,222
Cash dividends declared per common share ((in dollars per share))	$ 0.19	$ 0.18	$ 0.38	$ 0.36