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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended March 31, 2025

o 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)		(IRS Employer Identification No.)

420 South Congress Avenue, Delray Beach, Florida 33445
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (561) 526-4444

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered

Common Stock, PETS $.001 Par value per share	PETS	The NASDAQ Stock Market LLC (NASDAQ Global Select Market)
Preferred Stock Purchase Rights	N/A	The NASDAQ Stock Market LLC (NASDAQ Global Select Market)

Securities registered under Section 12(g) of the Act:

NONE

_____________________________________________________________________

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

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

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 o

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. x

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o

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

The aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant as of September 30, 2024, the last business day of the registrant’s most recently completed second fiscal quarter, was $74.9 million based on the closing sales price of the registrant’s Common Stock on that date, as reported on the NASDAQ Global Select Market.

The number of shares of the registrant’s Common Stock outstanding as of September 30, 2025 was 21,015,559.

PETMED EXPRESS, INC.

March 31, 2025 Annual Report on Form 10-K

TABLE OF CONTENTS


		Page

PART I		1
Item 1.	Business	2
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	22
Item 1C.	Cybersecurity	22
Item 2	Properties	24
Item 3.	Legal Proceedings	24
Item 4.	Mine Safety Disclosures	25

PART II		26
Item 5.	Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	26
Item 6.	[Reserved]	28
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 8.	Financial Statements and Supplementary Data	40
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	84
Item 9A.	Controls and Procedures	84
Item 9B.	Other Information	87
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	89

PART III		90
Item 10.	Directors, Executive Officers, and Corporate Governance	90
Item 11.	Executive Compensation	100
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	121
Item 13.	Certain Relationships and Related Transactions, and Director Independence	123
Item 14.	Principal Accountant Fees and Services	124

PART IV		125
Item 15.	Exhibit and Financial Statement Schedules	125
Item 16.	Form 10-K Summary	127

SIGNATURES		128

EXPLANATORY NOTE

PetMed Express, Inc. (“we,” “us,” “our,” or the “Company”) is filing this comprehensive annual report on Form 10-K for the fiscal years ended March 31, 2025, March 31, 2024, and March 31, 2023 (the “Comprehensive Form 10-K”). This Comprehensive Form 10-K contains our audited financial statements for the fiscal year ended March 31, 2025, as well as restatements of the following previously filed periods: (i) our audited consolidated financial statements as of and for the years ended March 31, 2024 and 2023 originally included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (the “2024 10-K”); (ii) our unaudited condensed consolidated quarterly financial information included in our Quarterly Reports on Form 10-Q for the quarterly periods within the fiscal years ended March 31, 2024 and 2023 (collectively, the “Historical Quarterly Reports”); and (iii) our unaudited condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2024, September 30, 2024 , and December 31, 2024 (collectively, the “2025 Quarterly Reports” and together with the Historical Quarterly Reports and the 2024 10-K, the “Prior Reports” and all financial statements included in the Prior Reports, collectively the “Affected Financial Statements”).

Background and Effects of the Restatement

As previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on October 7, 2025, the Audit Committee of the Board of Directors, after discussions with management and the Company’s independent registered public accounting firm, RSM US LLP (“RSM”), concluded that the Affected Financial Statements should no longer be relied upon. This conclusion resulted from income statement classification errors described below. As a result, any related press releases, investor presentations, shareholder communications, or other materials that describe or reference the impacted portions of the Affected Financial Statements should likewise no longer be relied upon.

The need for restatement was identified: (1) in part by the Audit Committee Investigation (see Part II, Item 7); and (2) during financial analyses conducted in connection with the preparation of the Company’s consolidated financial statements for the fiscal year ended March 31, 2025. The Company participates in a range of vendor-funded programs through which it receives reimbursements for certain activities, including advertising, sales incentives, and other promotional efforts, typically linked to purchase or sales volume thresholds. These programs are designed to offset costs incurred in connection with stocking, promoting, and selling vendor products.

The Company has historically accounted for promotional sales reimbursements as a component of its revenues. Upon further evaluation, and in discussion with RSM, the Company determined that this accounting treatment was not in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Under U.S. GAAP, such consideration received should instead be reflected as a reduction to either cost of sales and/or advertising expense, depending on the nature of the arrangement. As a result of this correction, previously reported revenue, cost of sales, and advertising expenses in the Affected Financial Statements have been revised. While the reclassification affects individual line items on the statements of operations, there is no impact on net income or other financial statements, including the consolidated balance sheets, statements of cash flows, or statements of changes in shareholders’ equity.

Internal Control Considerations

For a description of the material weaknesses in internal control over financial reporting and actions to be taken, to address the material weaknesses, see Item 9A, "Controls and Procedures" of this Form 10-K. In addition, RSM US LLP ("RSM"), the Company's independent registered public accounting firm, issued an adverse opinion on its report on the Company's internal control over financial reporting.

Items Restated in this Comprehensive Form 10-K

This Comprehensive Form 10-K reflects changes to the Affected Financial Statements. The restatement of the consolidated financial statements for the fiscal years ended March 31, 2024 and 2023 is disclosed in Note 1 to the consolidated financial statements. The restatement of the consolidated financial statements for the quarterly and year-to-date periods included in the Historical Quarterly Reports and in the 2025 Quarterly Reports are disclosed in Note 18 to the consolidated financial statements. Other sections impacted by the restatement of the Affected Financial Statements are:

•Part I, Item 1A. Risk Factors;

•Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations; and

•Part II, Item 9A. Controls and Procedures.

The Company has not filed, and does not intend to file, amendments to the previously filed Prior Reports. Accordingly, investors should rely only on the financial information and other disclosures regarding the Affected Financial Statements in this Comprehensive Form 10-K or in future filings with the SEC (as applicable), and not on any previously issued or filed reports, earnings releases or similar communications relating to these periods.

See Note 1 and Note 18 to the consolidated financial statements, included in Part II, Item 8 of this Comprehensive Form 10-K, for additional information on the restatement and the related consolidated financial statement effects.

See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the Completion of the Audit Committee Investigation.

PART I

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain information in this Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). You can identify these forward-looking statements by the words "believes," "intends," "expects," "may," "will," "should," "plan," "projects," "contemplates," "intends," "budgets," "predicts," "estimates," "anticipates," or similar expressions. These statements are based on our beliefs, as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties, and assumptions. Actual future results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Annual Report on Form 10-K under the heading “Risk Factors.” 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 the filing of this Annual Report on Form 10-K. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

NOTE REGARDING COMPANY REFERENCES

When used in this Annual Report on Form 10-K, unless otherwise stated or the context otherwise indicates, "PetMed Express," “PetMeds,” "PetMed," "the Company," "we," "our," and "us" refers collectively to PetMed Express, Inc. and its direct and indirect wholly owned subsidiaries, taken as a whole. "PetCareRx" refers to PetCareRx, Inc., a wholly owned subsidiary of PetMed Express, Inc..

ITEM 1. BUSINESS

GENERAL

PetMed Express, Inc. and subsidiaries, d/b/a PetMeds®, and as parent company of PetCareRx®, is a pioneer in pet healthcare, building a consumer-first digital platform in 1996 that transformed the way customers fulfill pet medications. Nearly thirty years later, as a leading nationwide direct-to-consumer pet health and wellness retailer, the Company markets and sells directly to consumers through its websites (Petmeds.com and PetCareRx.com), customer contact center (1-800-PetMeds), and mobile applications (iOS and Android). The Company provides access to top branded pharmaceuticals, generic medications, compounded prescription medications, pharmacy fulfillment, and personalized autoship capabilities. Our digital platform offers pet healthcare solutions for a broad range of chronic conditions, including those related to allergy, arthritis, anxiety, kidney, hyperthyroidism, and others for cat, dog, and horses. We also offer access to a range of non-prescription health and wellness products and Rx food, non-Rx food, and treats. PetMeds and PetCareRx receive the pet’s prescription through our websites and connects to the customer's licensed veterinarian for approval. Through our content website, pethealthmd.com, consumers can access educational articles for any health-related questions regarding their pets. The Company offers consumers an attractive alternative for obtaining pet medications, foods, and supplies in terms of convenience, price, speed of delivery, and valued customer service. Through partnerships with 75,000

veterinarians and a loyal customer base who rely on our services, our in-house pharmacies and extended pet healthcare partnerships seek to offer unparalleled value and convenience to families at every stage of their pets' lives.

We are deeply committed to the mission and purpose that has driven our business from the start. Since our founding, we have fulfilled orders for almost twenty-million pet parents in all 50 states and have been instrumental in providing products that help pets live longer, healthier lives. The support of our customers nationwide has been the cornerstone of our success. Honoring our combined legacy, we bring our core values to every role we undertake as we empower pet families, ensuring they have access to products and services that can provide the best possible care for their dogs, cats, and horses.

Since 1996, PetMeds has been serving as a trusted source for pet health across North America. In April 2023, we acquired PetCareRx, Inc. (“PetCareRx”), an online supplier of pet medications, foods, and supplies based in New York. This acquisition added a catalog of Rx and non-Rx food and supplies, allowing us to expand beyond our core offering of pet prescriptions. Since this acquisition, we provide a more extensive selection of premium food, supplements, treats, and other pet supplies. Together, our brands are dedicated to delivering exceptional science-backed, veterinarian approved products from quality suppliers, making it easier for families to address preventive and chronic health needs in order to support the longevity of their companion animals.

Over the years, our organization has made investments in our pharmacies to ensure regulatory compliance, accreditations, and operational excellence which include implementing a rigorous verification process from order to shipment to ensure top quality control. Employing licensed pharmacists and a 50-state licensed Pharmacist-in-Charge for each of our two pharmacy locations, allows us to provide focused and specialized care backed by expertise. We continuously monitor and update our regulatory licenses in every state, including the U.S. Virgin Islands. Our pharmacies are accredited by the NABP.Com and LegitScript and are focused on exceeding all federal and state regulatory requirements.This specialized expertise creates a defensible moat that is further supported by the nearly thirty years of pet health data, and partnerships with over 75,000 veterinarians.

As a core service to our customers, pet owners have the ability to contact our customer support agents and pharmacists at 1-800-petmeds for assistance with their animals' wellness needs via telephone, chat, and email. Additionally, we offer extended services, including telehealth, pet insurance, and employee benefits programs, through our core partners Dutch, Vetster, and Pet Synergy Group.

The Company's executive headquarters offices are currently located at 420 South Congress Avenue, Delray Beach, Florida 33445, and our telephone number is (561) 526-4444. The Company has a March 31 fiscal year.

OUR INDUSTRY

Our business focuses on a specific segment of the pet industry: pet health for dogs, cats, and horses. Within this segment, our merchandise categories include prescription medications, generic medications, over-the-counter (OTC) solutions, vitamins and supplements, prescription food, non-prescription food, and a comprehensive assortment of pet supplies including treats. The total addressable market for pet medications, foods, and health products and services is vast and continuously expanding. According to the American Pet Products Association, pet spending in the United States increased by 3% to $152 billion in 2024, with veterinary care and prescription medications accounting for $39.8 billion or 26% of that total. The increasing demand for pet wellness products presents significant potential for us to expand our footprint and capture a larger share of this thriving market through our private label programs.

THE PET CONSUMER

According to the April 2025 Cleveland Research Pet Retail and Animal Health Report:

•Approximately 40% of consumers expect to significantly or slightly decrease their purchases due to anticipated tariffs and stock market volatility.

•The outlook across the pet landscape headed into 2025 shows muted pet household adoptions coupled with pricing pressure – overall resulting in pressured vet visits and spend at pet retail

Based on the items from the above report:

•We are executing a series of strategic initiatives that enhance customer experience, optimize operational efficiency, and leverage innovation to drive long-term shareholder value.

•We believe that a high level of customer care and support is critical in retaining and expanding our customer base. Our goal is to create a concierge customer experience through modern technology that incorporates AI, automation, and product management that drives personalized journeys across all touchpoints.

•To cater to a diverse range of budgets, we sell products at multiple price points and offer promotions to ensure that every customer can find products that meet their needs and preferences.

•We offer auto-ship options for many of our products, ensuring convenient and consistent compliance for pets.

•Looking ahead, we are evolving from a digital-only model to a true omnichannel business offering consumers a range of products and services. That means meeting pet parents where they are, however they choose to shop.

More than 1.7 million customers have purchased from us within the last three fiscal years, including customers acquired in April 2023 as a part of our PetCareRx acquisition. We attracted approximately 351,000 and 457,000 new customers in fiscal 2025 and 2024, respectively. Our customers are located throughout the United States, with approximately 50% of customers residing in California, Florida, Texas, New York, Pennsylvania, North Carolina, Georgia, and Virginia. The average order value increased slightly year over year and was approximately $97 for fiscal 2025 and $94 for fiscal 2024.

PRODUCTS AND SERVICES

PetMeds offers a wide array of products and services dedicated to pet health and wellness. As a licensed online pharmacy, we provide medications for dogs, cats, and horses, ensuring that pets receive the necessary treatments prescribed by their veterinarians.

We address the most common conditions - allergies, arthritis, and anxiety and offer prescriptions for more chronic conditions such as heartworm, dermatitis, thyroid, diabetes, pain medications, heart/blood pressure, other specialty medications. A large percentage of our business is selling flea and tick preventatives through Rx, non-Rx, and OTC supplements and sprays. In addition, we stock a variety of OTC medications as alternatives to prescriptions that include bone and joint care products, vitamins, treats, nutritional supplements, hygiene products and other health-related supplies. PetMeds also offers the best-named brands in premium pet foods and treats including veterinary prescription Rx diets. Our exclusive range of private label products, including joint enhancers, vitachews, shampoos and flea and tick prevention offers exceptional value to our customers at a high margin. Our private label assortment is launching on Amazon in early FY2026 and is expected to launch across multi channels in the latter part of the fiscal year.

To obtain prescription medications, we have a three step process: customers place the order and provide their veterinarian's details, and PetMeds handles the entire end-to-end verification process before shipping. Additionally, PetMeds has veterinary pharmacists and technicians on staff to answer pet owners' medication-related questions, aiming to be a trusted resource for pet health needs.

Pet Health Customer Care Specialists - Customer Contact Center

We believe that a high level of customer care and support is critical in retaining and expanding our customer base. We provide our employees with ongoing training programs under the supervision of our training managers that include a variety of topics such as product knowledge, technology usage, customer service tips, and the relationship between our Company and veterinarians. Our customer contact center agents respond to customers’ e-mails, calls, and live web chats that are related to products, order status, prices, and shipping. Having consolidated our two branded teams and incorporating a best-in-class technology provider, our customer care agents ensure that we can maximize our representatives’ time, ensuring top-tier customer care, service, and support.

Holistic Wellness Services:

Pet Telemedicine: Since 2022, the Company has engaged in partnerships to provide telemedicine services, with the convenience of consultations, diagnoses and in certain states, prescriptions from board-certified veterinarians all from the comfort of their homes. In May 2025, we announced our strategic partnership with Dutch Pet, Inc. ("Dutch"), a virtual veterinary care provider, to expand our health services ecosystem with affordable, accessible pet healthcare options. This new partnership enables pet parents to leverage Dutch’s convenient technology and veterinary team to secure prescriptions for PetMeds’ broad selection of medications in a timely manner. Under the partnership, pet parents are able to sign up for a monthly Dutch membership and be connected virtually with veterinarians for 24/7 appointments in 34 states.

Employee Pet Benefits: We continue to develop partnerships that allow us to be part of employer bundled services, offering discounted pet care solutions that provide participating companies' employees with access to our membership programs through their respective company employee benefits offerings. These membership programs include a variety of exclusive PetPlus perks which includes discounts for more than 700,000 partners, and valuable telehealth, pet training, and delivery services that streamline educational content for pet parents

OUR EXPERT VETERINARY ADVISORY BOARD

To further our commitment to connecting with customers through education and professional credibility, the Company's Veterinary Advisory Board (VAB) provides insights to help ensure that all of our initiatives result in improved patient care. This esteemed board consisted of five expert veterinarians across the country throughout FY2025, with decades of experience in private practice and academia, helping shape the future of veterinary medicine.

STRATEGY

The Company is committed to evolving from a leading digital-only model to a true omnichannel business, offering consumers a range of products and services. As part of this transformation, we are executing a series of strategic initiatives that expand into multi channels, the first of which is Amazon. We have added compound pharmacy partnerships, a key area of growth within the animal health industry, including top pharmacy Mixlab, which has five labs located across the country. We are also adding a global licensing agreement for non-consumable pet products set to launch in retail channels in early calendar year 2026. And lastly, we are introducing private label functional health products in the latter half of FY2026 - veterinary formulated and exclusive to PetMeds - into both DTC and wholesale channels enhancing margins, differentiating the company, and building brand loyalty At the same time, we are investing in modernizing our technology, including our e-commerce infrastructure and cloud environments, and in our customer experience, including speed to customer. We believe all of this will drive long-term shareholder value. Concurrently, we are balancing near-term business goals with purposeful investments that support customer acquisition and retention.

DISTRIBUTION CHANNELS

We market and sell our products and services through three primary distribution channels:

1E-commerce Websites – Through our owned and operated websites and mobile applications, including PetMeds.com and PetCareRx.com, we offer customers convenient and accessible platforms to purchase prescription and non-prescription pet medications, food, and wellness products.

Key features of our websites include AutoShip subscriptions (approximately 56.1% of our sales were generated via our AutoShip and membership program in our 4th quarter ended March 31, 2025), "ask-the-vet" services, VetLive consultations, live web chat, easy refill medication reminders, a local veterinarian finder, and express checkout options.

2Customer Contact Center – We operate a dedicated toll-free customer service center staffed by trained Pet Health Specialists who provide personalized support and assist with product inquiries, prescription processing, and order placement.

3PetAssure Broker Network – Through PetAssure, we also distribute products and wellness services via a brokered benefits model, primarily targeting employers offering pet health benefits as part of their employee wellness programs.

We are also currently investing in enhancements to our digital platforms to further personalize the customer journey, optimize navigation and conversion, and ensure a seamless omnichannel experience across web, mobile, and customer service touchpoints.

Marketing and Lifecycle Engagement

As part of our fiscal 2026 marketing strategy we intend to integrate our two brands (PetMeds and PetCareRX) into a customer-centric relevant brand which resonates with our mission and provides direct value to our customers. This

includes establishing and building brand recognition to increase customer website traffic, better align with current customer needs, deploy targeted segmentation strategies to reach the right audiences, scale effective campaigns, add new customers, and build strong lifetime customer loyalty that, ultimately, will increase reorders, and develop incremental revenue opportunities. Our 360 integrated marketing strategy includes digital, CRM and offline channels to market to our existing customers and attract new customers. Our campaigns strive to convey our dedicated focus on the well-being of pets and our commitment to accompanying our customers on their pet's wellness journey, which includes both preventative and chronic solutions for cats, dogs and horses across diverse breeds, sizes, ages and conditions.

Through social platforms like Instagram and Facebook, we educate and inspire our community with:

•Short-form videos on pet wellness

•Pet shelter and sporting events content

•Lighthearted and funny pet-related and relatable content.

Additionally, Pethealthmd.com, our blog and pet health library, serves as an SEO traffic hub, continuously updated with articles covering pet behavior, nutrition, pharmaceutical and natural remedies.

The Company aims to create a best-in-class marketing operation through a continuous test-and-learn approach as we progress into fiscal 2026. This will be visible across all customer touchpoints.

OVERVIEW OF PHARMACY OPERATIONS

Our pharmacists and pharmacy technicians oversee the processing of every order and follow a regimented 5-point verification process to ensure our customers receive an order that addresses their pet's needs. We request the following information to process prescription orders: pet information, prescription information, and the veterinarian’s name and phone number. This information is entered into our order processing system, which checks for the verification for prescription medication orders and a valid payment method for all orders. Verified orders are then sent to our fulfillment centers, where items are picked, and then shipped via one of our several shipping carriers.

SOURCING OF MERCHANDISE INVENTORY

We source our inventory from a diverse array of vendors that specialize in prescription, food, and health and wellness-related products that include manufacturers and domestic distributors. Of the thousands of SKUs we offered our customers in fiscal 2025, approximately 81% of all products were purchased from six key suppliers. We believe that deepening our relationships with manufacturers and distributors is crucial to ensuring a reliable supply of the products our customers need, and we continue to rigorously attend to those vendor relationships.

As part of our growth strategy, we prioritize maintaining direct relationships with leading pharmaceutical manufacturers, providing both popular prescription and non-prescription medications. These direct relationships not only help us secure an adequate volume of products but also enable us to offer the latest and most trusted pet health solutions. Our continued partnerships with these major manufacturers are a testament to our commitment to quality and reliability in serving our customers.

DISTRIBUTION OF MERCHANDISE INVENTORY

We purchase all of our medication directly from the manufacturer or from FDA registered United States based distributors to ensure the authenticity and safety of all medications. We efficiently manage our inventory and fulfill customer orders from our corporate headquarters in Delray Beach, Florida, and our Northeast warehouse location in Lynbrook, New York while conducting thorough checks on every order received for veterinary approval and prescription labeling accuracy. Our in-house pharmacy, fulfillment and distribution operations oversee the entire supply chain—from order placement and processing to fulfillment and shipping. For prescription medications, we strive to ship immediately upon authorization by the customer’s veterinarian.

INFORMATION SYSTEMS

We utilize a combination of Company-owned and third-party-operated information systems to support our core business functions. These integrated systems provide capabilities across retail operations, merchandising, human resources,

and financial reporting. Functional areas supported include digital commerce, inventory management, customer care, supply chain logistics, demand planning, sourcing, payroll, workforce scheduling, and general ledger management.

We continue to make strategic investments in modernizing and enhancing our technology infrastructure to improve operational efficiency, scalability, and support digital growth. These investments are designed to strengthen our pharmacy operations, fulfillment center capabilities, MarTech platforms, and loyalty and retention programs, while also enabling faster, data-driven decision making.

DIGITAL TECHNOLOGY SYSTEMS

In fiscal 2026, our Company is focused on advancing the modernization of its digital technology infrastructure to drive operational excellence and support long-term growth. This includes continued upgrades across our e-commerce platforms, call centers, order management systems (OMS), pharmacy systems and fulfillment and inventory management capabilities.

Our digital transformation initiatives are aimed at simplifying and integrating business processes, enabling faster innovation, and enhancing system resilience. By unifying our digital ecosystem—including technology frameworks, tools, and talent—we are building a robust foundation to support seamless customer interactions across channels.

These ongoing technology investments will position us to adapt quickly to market demands, deliver personalized and efficient customer journeys, and maintain a high level of service reliability and responsiveness.

COMPETITION

We operate in a rapidly evolving, highly competitive, and fragmented business environment. Our competitors include veterinarians, local and national chain specialty retailers, and vendors' own e-commerce stores. Several large retailers have announced entrance into the pet pharmacy space this year. Additionally, consumers' discretionary spending on pets extends to categories like apparel, grooming, boarding, and dog-walking. Operating in a highly competitive industry environment can cause the Company to engage in greater than expected promotional activity at times, which would result in pressure on average unit retail pricing and gross profit.

Our distinct advantage lies in our 29 years of expertise, delivered through our team of highly qualified pharmacists and technicians with specialized training in veterinary pharmacology that are licensed across all fifty states. These teams execute a rigorous 5-point verification process and are compliant with all federal regulations set by the FDA and DEA. PetMeds and PetCareRx's pharmacies are accredited by the National Association of Boards of Pharmacy and LegitScripts. In addition to our deeply experienced pharmacists and technicians, our Customer Care team is comprised of many longtime employees as well as new talent, all of whom share a passion for pets and who exemplify our commitment to delivering high-quality products and personalized service to our customers. This combination of quality, expertise, passion and efficiency sets us apart in the marketplace.

INTELLECTUAL PROPERTY

We conduct our business under the trade names “PetMeds” and "PetCareRx" and use a family of trade names all containing the terms “PetMeds”, “PetMed” or "PetCareRx" in some form. We believe the “PetMeds” and "PetCareRx" family of trademarks, have added significant value and are important factors in the marketing of our products. We have also obtained the right to use and control the Internet addresses which include but are not limited to www.1800petmeds.com, www.1888petmeds.com, www.petmedexpress.com, www.petmed.com, www.petmeds.com, and www.petcarerx.com.

We also obtained the right to use and control the Internet addresses www.petmeds.pharmacy, www.petmed.pharmacy, www.1800petmeds.pharmacy, petcare.pharmacy, and petcarerx.pharmacy, through a National Association of Boards of Pharmacy® initiative to ensure high standards for online pharmacies. We do not expect to lose the ability to use the Internet addresses; however, there can be no assurance in this regard and the loss of these addresses may have a material adverse effect on our financial position and results of operations. We are the exclusive owners of United States trademark registrations for “America’s Largest Pet Pharmacy®,” “America’s Most Trusted Pet Pharmacy®,” “Trusted Pet Medication Experts®,” “PetMed Express, Inc.®,”1-800-PetMeds and Design®,” 1-800-PetMeds®,” “PetMeds®,” “Your Trusted Pet Health Expert®," "PetPlus®," "PetCareRx®," "Nose to Tail®," "Nose to Tail Health®," and "Nose to Tail Savings®," among numerous others. We have also applied for trademark protection for "VetLiveTM."

GOVERNMENT REGULATION

We are subject to a broad range of federal, state, and local laws and regulations that relate to our business. Dispensing prescription medications is governed at the state level by Boards of Pharmacy, or similar regulatory agencies, of each state where prescription medications are dispensed. PetMeds is subject to regulation by the State of Florida and is licensed as a community pharmacy by the Florida Board of Pharmacy, and PetCareRx is subject to regulation by the State of New York and is licensed as a community pharmacy by the New York Pharmacy Board.

Our pharmacy practices are also licensed and/or regulated by 48 other state pharmacy boards, the District of Columbia Board of Pharmacy, the U.S. Virgin Islands Board of Pharmacy, and the United States Drug Enforcement Administration ("DEA"), and with respect to our products, by other regulatory authorities including, but not necessarily limited to, the United States Food and Drug Administration (“FDA”) and the United States Environmental Protection Agency ("EPA"). Our registration with the DEA, and state registrations/permits as required, permit us to dispense Schedule IV and Schedule V controlled substances. As a licensed pharmacy in the State of Florida, we are subject to the Florida Pharmacy Act and regulations promulgated thereunder. If we fail to maintain our licenses with the Florida Board of Pharmacy, or if we do not maintain the licenses/registrations/permits from other state pharmacy boards (including our home state pharmacy license in New York for PetCareRx), or if we face actions from the DEA, FDA EPA, or other enforcement regulators, our ability to dispense prescription medications to pet owners could be halted, which could have a material adverse effect on our financial condition and operations.

In addition to the foregoing, the FDA regulates animal feed, including pet food, under the Federal Food, Drug, and Cosmetic Act (the “FFDCA”) and its implementing regulations. Although pet foods are not required to obtain premarket approval from the FDA, the FFDCA requires that all animal foods are safe for consumption, produced under sanitary conditions, contain no harmful substances, and are truthfully labeled. Most states also require that pet foods distributed in the state be registered or licensed with the appropriate state regulatory agency. In addition, most facilities that manufacture, process, pack, or hold foods, including pet foods, must register with the FDA and renew their registration every two years, and are subject to periodic FDA inspection. This includes most foreign, as well as domestic facilities. Registration must occur before the facility begins its pet food manufacturing, processing, packing, or holding operations.

The labeling of pet foods is regulated by both the FDA and some state regulatory authorities. FDA regulations require proper identification of the product, a net quantity statement, a statement of the name and place of business of the manufacturer or distributor, and proper listing of all the ingredients in order of predominance by weight. Most states also enforce their own labeling regulations. The degree of oversight of the implementation of these regulations varies by state, but typically includes a state review and approval of each product label as a condition of sale in that state. The FDA also regulates the inclusion of specific claims in pet food labeling. For example, pet food products that are labeled or marketed with claims that may suggest that they are intended to treat or prevent disease in pets would potentially meet the statutory definitions of both a food and a drug.

Our distribution of pet insurance products under our strategic partnerships also subjects us to state laws and regulations relating to the sale of insurance products, including registering as an insurance distributor in states in which we offer and sell co-branded pet insurance products and otherwise complying with state and federal laws relating to the sale and distribution of insurance products.

We rely on legal and operational compliance programs, as well as outside counsel, to guide our business in complying with applicable laws and regulations in the areas in which we do business. In addition, regulatory regime changes may add cost and complexity to our compliance efforts. It is difficult to predict with certainty the potential impact of future regulatory compliance efforts and future costs associated with such matters. Our failure to comply with such laws and regulations may result in adverse actions that could disrupt our operations and adversely affect our financial results.

HUMAN CAPITAL

The Company is committed to fostering a culture that not only advances strategic and key business priorities but also empowers employees to make a positive impact in their communities. We believe that attracting, retaining, and managing a diverse and talented workforce is crucial to our success and our workforce includes individuals of different ages, colors, disabilities, ethnicities, family or marital statuses, gender, or expressions, languages, national origins, physical and mental abilities, political affiliations, races, religions, sexual orientations, socio-economic statuses, veteran statuses, and other characteristics.

To ensure our employees have the opportunity to develop and excel, human capital management is a top priority for our executives and Board of Directors, as evidenced by the expansion of the Compensation Committee to the Compensation and Human Capital Committee. We are dedicated to identifying and nurturing the talent necessary for our long-term success. We are intentional about fostering a workplace where employees are encouraged to build their skills and explore opportunities for advancement. This includes access to a variety of resources to enhance their skills and advance their careers, including mentorship programs, individual development opportunities, and exposure to cross-functional projects that provide diverse experiences.

Additionally, we offer functional management training, educational opportunities, certification programs, and educational assistance to support our future leaders in their professional growth.

We pride ourselves on maintaining a strong corporate culture that upholds high standards of ethics and compliance. Our Code of Business Conduct and Ethics outlines the principles that guide the behavior of our employees, officers, directors, and vendors. To ensure adherence to these standards, we maintain a whistleblower policy and an anonymous hotline for confidential reporting of any suspected policy violations or unethical conduct. Furthermore, all staff members are required to complete anti-harassment training.

By fostering a supportive and inclusive environment, we empower our employees to thrive both professionally and personally, driving our company forward and making a meaningful impact in our communities.

As of September 30, 2025, we had 173 full-time employees. None of our employees are represented by a labor union or governed by any collective bargaining agreements. We consider relations with our employees to be good. The majority of our employees are connected to our Delray Beach, Florida headquarters and distribution center. Many of our personnel are currently working remotely or in a hybrid work model with the exception of essential on-site workers.

We offer our employees a wide array and highly competitive benefits such as life and health (medical, dental, and vision) insurance, medical and dependent care flexible spending accounts, supplemental insurance coverage, pet insurance, parking and commuter benefits, legal services provider network, paid time off (including gender neutral parental leave) and retirement benefits, as well as emotional well-being services through our health insurance program.

Available Information

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

ITEM 1A. RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties, including those described below, that could materially and adversely affect our business, financial condition, operating results and the trading price of our common stock. Because of the following factors, as well as other factors affecting the Company’s results of operations and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. This discussion of risk factors contains forward-looking statements. This section should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Regulatory Risks

Any failure to comply with various state or federal regulations covering our pet health business, including the dispensing of prescription pet medications may subject us to reprimands, sanctions, probations, fines, suspensions, or the loss of one or more of our pharmacy licenses.

Our pet health business, which includes the sale and delivery of prescription pet medications is generally governed by state laws and state regulations, and with respect to controlled substances, also by federal law. Governmental authorities that regulate our business have broad latitude to make, interpret, and enforce the laws and regulations that govern us. Since our pharmacy is located in the State of Florida, the Company is governed by the laws and regulations of the State of Florida. Each prescription pet medication sale we make is likely also to be covered by the laws of the state where the customer is located. The laws and regulations relating to the sale and delivery of prescription pet medications vary from state to state, but generally require that prescription pet medications be dispensed with the authorization from a prescribing veterinarian. Our current home-state license with the Florida Board of Pharmacy is valid until February 28, 2027, and PetCareRx’s home-state license in the State of New York is valid until April 30, 2028, however, there is no guarantee that we will be able to renew such licenses when required. To the extent that we are unable to maintain our license as a community pharmacy with the Florida Board of Pharmacy (and to the extent we are unable to maintain PetCareRx’s license in New York), or if we do not maintain the licenses granted by other state boards, or if we become subject to actions by the FDA, or other enforcement regulators, our dispensing of prescription medications to pet owners could cease, which could have a material adverse effect on our operations.

The expansion of our business into the offer and sale of pet insurance products also subjects us to additional laws and regulations regarding those activities, including as a registered insurance distributor in states in which we offer and sell co-branded pet insurance products and otherwise complying with state and federal laws relating to the sale and distribution of insurance products.

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

Business Risks

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

Our current product line contains approximately 10,000 SKUs including the SKUs acquired in our acquisition of PetCareRx. A significant portion of PetMeds sales is attributable to products representing approximately 100 SKUs, including the most popular flea and tick, and heartworm preventative brands. We need to properly manage our inventory to provide an adequate supply of these products and avoid excessive inventory of the products representing the balance of the SKUs. We generally place orders for products with our suppliers based upon our internal estimates of the amounts of inventory we will need to fill future orders. These estimates may be significantly different from the actual orders we receive.

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

Resistance from veterinarians to authorize prescriptions, or attempts or efforts by veterinarians to discourage pet owners from purchasing from us could cause our sales to decrease and could materially adversely affect our financial condition and results of operations.

Since we began our operations, some veterinarians have resisted providing our customers with a copy of their pet’s prescription or authorizing the prescription to our pharmacy staff, thereby effectively preventing us from filling such prescriptions under state law. We have also been informed by customers and consumers that veterinarians have tried to discourage pet owners from purchasing from internet mail-order pharmacies.

The laws and regulations relating to the sale and delivery of prescription pet medications vary from state to state. Although veterinarians in some states are required by law to provide a pet owner with a prescription if medically appropriate, if the number of veterinarians who refuse to authorize prescriptions should increase, or if veterinarians are successful in discouraging pet owners from purchasing from internet mail-order pharmacies, our sales could decrease, and our financial condition and results of operations may be materially adversely affected.

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

While we ship pet medications to customers in all 50 states, approximately 50% of our sales for the fiscal year ended March 31, 2025, were made to customers located in the states of Florida, California, Texas, New York, Pennsylvania, North Carolina, Virginia and Georgia. If for any reason our license to operate a pharmacy in one or more of those states should be suspended or revoked, or if it is not renewed, our ability to sell prescription medications to residents of those states would cease and our financial condition and results of operations in future periods would be materially adversely affected.

We have direct buying relationships with all the major pet medication manufacturers and each contractual relationship depends on our compliance with each respective manufacturer’s minimum advertised pricing policies (MAPP).

The Company maintains direct purchasing relationships with all the major pet medication manufacturers. These relationships entitle the Company to buy directly from the manufacturer under the terms and conditions of a purchasing agreement which dictates purchase pricing of inventory and criteria to obtain additional discounts and rebates. The terms of these agreements also require the Company to comply with the manufacturers’ MAPP. Each advertisement and/or promotion of a product below the MAPP price, should they occur, would be a violation of the policy. This policy applies to all advertisements of products in all media including, without limitation, flyers, posters, coupons, mailers, inserts, newspapers, magazines, on-line catalogs, mail order catalogs, public signage and all Internet or similar electronic media, television, radio and public signage, including websites, email newsletters, forums, and auction sites.

At the discretion of the manufacturers, non-compliance with the MAPP can result in one or more of the following actions: (1) forfeiture of future rebates or discounts from the manufacturer, (2) suspension of future purchases from the manufacturer, (3) or termination of current or future business relationship. The Company has and will continue to make every attempt to abide by the manufacturers MAPP. However, no assurances can be made that the Company will not violate MAPP inadvertently. A reduction or discontinuance of these rebates or discounts would increase our costs and could reduce our profitability. If any of these major pet medication manufacturers were to terminate our purchasing relationship it could materially adversely affect our business. If the manufacturers are not able to enforce their MAPP industry-wide, then our profit margins and results of operations may also be impacted negatively.

The loss of any of our key suppliers would negatively impact our business.

We have direct purchasing relationships with all of the major pet medication manufacturers, from the majority of which we purchase significant quantities of pet medication products.. We do maintain annual purchasing contracts with these major manufacturers. While we believe that our supplier relationships are good, a supplier could discontinue selling to us at any time, or stop paying cooperative fees to us at any time . The loss of any of our key suppliers of pet medications offered by us, or the loss of vendor cooperative payments, would have a negative impact on our business, financial condition, and results of operations.

Shipping is a critical part of our business and any changes in, or disruptions to, our shipping arrangements could adversely affect our business, financial condition, and results of operations.

We currently rely on third-party national, regional, and local logistics providers to deliver the products we offer on our websites. If we are not able to negotiate acceptable pricing and other terms with these providers, or if these providers experience performance problems or other difficulties in processing our orders or delivering our products to customers, it could negatively impact our results of operations and our customers’ experience. In addition, our ability to receive inbound inventory efficiently and ship merchandise to customers may be negatively affected by factors beyond our and these providers’ control, including inclement weather, fire, flood, power loss, earthquakes, acts of war or terrorism or other events, such as labor shortages and disputes, financial difficulties, volatility in the prices of fuel, gasoline and commodities

such as paper and packing supplies, system failures and other disruptions to the operations of the shipping companies on which we rely. We are also subject to risks of damage or loss during delivery by our shipping vendors. If the products ordered by our customers are not delivered in a timely fashion or are damaged or lost during the delivery process, our customers could become dissatisfied and cease buying products through our websites and mobile application, which would adversely affect our business, financial condition, and results of operations.

The quality of our customer service and support is important to our customers, and if we fail to provide adequate levels of customer service and support, we could lose customers, which would harm our business.

We believe that a high level of customer care and support is critical in retaining and expanding our customer base. Although our customer care representatives participate in ongoing training programs on a variety of topics, such as product knowledge, computer usage, customer service tips, and the relationship between our Company and veterinarians, any perceived or actual decline in our customer-service response times or in the quality of our customer care representatives, even if episodic or temporary, could hurt our business. If customers perceive that our customer care and support does not compare favorably to our competitors, then we may lose customers to such competitors.

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

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

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

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

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

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

addresses or prevent third parties from acquiring Internet addresses that are confusingly similar to, infringe upon, or otherwise decrease the value of our Internet addresses.

Since most of our operations are housed in a single location, we are more susceptible to a business interruption in the event of damage to, or disruptions in, our facility, particularly with respect to extreme weather events.

The PetMeds headquarters and principal distribution center are currently located in one location in South Florida, and most of our shipments of products to our customers are made from this primary distribution center. Our PetcareRx principal distribution center is located in one location in New York. Because we consolidate our operations for each brand in one location, we are more susceptible to power and equipment failures, and business interruptions in the event of fires, floods, and other natural disasters than if we had additional locations. Furthermore, because our largest distribution center is located in South Florida, which is a hurricane-sensitive area and is susceptible to sea-level rise, we are particularly susceptible to the risk of damage to, or total destruction of, our headquarters and distribution center and surrounding transportation infrastructure caused by a hurricane or rising sea levels. Additionally, intense weather conditions may cause property insurance premiums to significantly increase in the future. We recognize that the frequency and intensity of extreme weather events, sea-level rise, and other climatic changes may continue to increase and, as a result, our exposure to these events may increase.

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

A failure or misuse of our information systems and customer-facing technology systems, including our online payment methods, could adversely affect our results of operations, expose us to third-party claims, or increase our exposure to fraud and other risks.

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

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

Further, we currently accept payments using a variety of different payment methods which may subject us to additional regulations and compliance requirements, and may also increase our exposure to fraud, criminal activity, and other risks. In the future, as technology develops and we begin to offer new payment options to consumers, including by integrating emerging mobile and other payment methods, we may be subject to additional regulations, compliance requirements, or fraud. If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card payments from consumers or facilitate other types of online payments. If any of these events were to occur, our business, financial condition, and results of operations could be materially and adversely affected.

Our failure or the failure of third-party service providers to protect our websites, networks, and systems against cybersecurity incidents, or otherwise to protect our confidential information, could damage our reputation and brands and substantially harm our business, financial condition, and results of operations.

As a result of our services being web based, we collect, process, transmit and store large amounts of data about our customers, employees, suppliers and others, including credit card information and personally identifiable information, as well as other confidential and proprietary information. We also employ third-party service providers for a variety of reasons, including storing, processing and transmitting proprietary, personal and confidential information on our behalf. While we rely on tokenization solutions licensed from third parties in an effort to securely transmit confidential and sensitive information, including credit card numbers, advances in computer capabilities, new technological discoveries or other developments may result in the whole or partial failure of these solutions to protect confidential and sensitive information from being breached or compromised. Similarly, our security measures, and those of our third-party service providers, may not detect or prevent all attempts to hack our systems or those of our third-party service providers. Distributed Denial-of-Service ("DDoS") attacks, viruses, malicious software, break-ins, phishing attacks, ransomware, social engineering, security breaches or other cybersecurity incidents and similar disruptions that may jeopardize the security of information stored in or transmitted by our websites, networks and systems or that we or our third-party service providers otherwise maintain, including payment card systems, may subject us to fines or higher transaction fees or limit or terminate our access to certain payment methods. We and our service providers may not anticipate or prevent all types of attacks until after they have already been launched, and techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers. In addition, cybersecurity incidents can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by persons with whom we have commercial relationships.

Breaches of our security measures or those of our third-party service providers or any cybersecurity incident could result in unauthorized access to our websites, networks and systems; unauthorized access to and misappropriation of consumer and/or employee information, including personally identifiable information, or other confidential or proprietary information of ourselves or third parties; viruses, worms, spyware or other malware being served from our websites, networks or systems; deletion or modification of content or the display of unauthorized content on our websites; interruption, disruption or malfunction of operations; costs relating to cybersecurity incident remediation, deployment of additional personnel and protection technologies, response to governmental investigations and media inquiries and coverage; engagement of third party experts and consultants; litigation, regulatory action and other potential liabilities. If any of these cybersecurity incidents occur, or there is a public perception that we, or our third-party service providers, have suffered such a breach, or we are unable to determine materiality within a reasonable timeframe under the new Cybersecurity rules, our reputation and brands could also be damaged and we could be required to expend significant capital and other resources to alleviate problems caused by such cybersecurity incidents. As a consequence, our business could be materially and adversely affected and we could also be exposed to litigation and regulatory action and possible liability. In addition, any party who is able to illicitly obtain a customer’s password could access the customer’s transaction data or personal information. Any compromise or breach of our security measures, or those of our third-party service providers, or our failure to protect our customer's confidential information and data, could violate applicable privacy, data security and other laws, and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition, and results of operations.

The costs of mitigating cybersecurity risks are significant and are likely to increase in the future. These costs include, but are not limited to, retaining the services of cybersecurity providers; compliance costs arising out of existing and future cybersecurity, data protection and privacy laws and regulations; and costs related to maintaining redundant networks, data backups and other damage-mitigation measures. We currently carry cyber insurance, which may mitigate certain potential losses.

Our migration of data and systems to a new information technology platform may disrupt our operations.

As an established web-based seller of pet products, we rely on a combination of legacy public-facing websites, internal applications and services, and back-end business intelligence systems. We are in the process of migrating and upgrading many of our platforms and applications to more modular, web-based and SaaS systems. If we are not able to realize the anticipated benefits of our migration to this new infrastructure, our business could be harmed. There may be unforeseen issues as a result of these migrations that may cause disruptions to the availability of our products due to service outages, downtime or other similar issues that could harm our business. We also may be subject to additional risk of cybersecurity breaches or other improper access to our data or confidential information following our migration to these new computing platforms. In addition, our new platforms may operate differently than anticipated when introduced or when new versions or enhancements are released. As we increase our reliance on our systems, our exposure to damage from service

interruptions may increase. Further, our transition could involve significant time and expense and could negatively impact our ability to deliver our products and services, which could harm our financial condition and results of operations.

Our marketing, e-commerce, and other business activities are subject to a variety of federal and state laws and regulations relating to privacy, data protection, marketing and advertising and consumer protection, many of which may evolve or expand beyond their current scope, and our failure to comply with this complex set of evolving laws and regulations could adversely affect our business, financial condition, and results of operations.

We collect, maintain, use, and share personal information provided to us through our various marketing activities, including email and social media marketing and postal mailings, as well as other consumer, employee, and business-to-business interactions, in order to provide a better experience for our customers, employees, and vendors. Our current and future marketing and advertising practices depend on our ability to collect, maintain, use, and share this personal information with certain service providers and other third-party vendors, and we are subject to various federal and state laws and regulations that govern such marketing and advertising practices. In addition, we also collect, store, and transmit employees’ health information for certain reasons, such as administering employee benefits; accommodating disabilities and injuries; complying with public health requirements; and maintaining employee safety in the workplace.

Laws and regulations relating to privacy, data protection, cybersecurity, marketing and advertising, and consumer protection are evolving and subject to potentially differing interpretations. While we strive to comply with all such regulations and believe that we are good stewards of our customers’ data, this area is rapidly evolving, and it is possible that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices. If so, we may be subject to proceedings or actions against us by governmental entities or others, and we may suffer damage to our reputation as a result of such proceedings or actions. We may also be contractually required to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any laws, regulations or other legal obligations relating to privacy, data protection, cybersecurity or consumer protection or any inadvertent or unauthorized use or disclosure of data that we store or handle as part of operating our business.

Federal and state governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising and other purposes. The U.S. government and state governments have enacted, have considered or are considering enacting, legislation or regulations that could significantly restrict the ability of companies and individuals to engage in these activities, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such tools. Additionally, some providers of consumer devices and web browsers have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the placement of cookies or to block other tracking technologies, which could result in the use of third-party cookies and other methods of online tracking becoming significantly less effective. The regulation of the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new customers on cost-effective terms and consequently, materially and adversely affect our business, financial condition, and results of operations.

In addition, various federal and state legislative and regulatory bodies, or self-regulatory organizations, may expand current laws or regulations, enact new laws or regulations or issue revised rules or guidance regarding privacy, data protection, cybersecurity, consumer protection, and advertising. For example, in June 2018, the State of California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which became effective on January 1, 2020. The CCPA requires companies that process information of California residents to make new disclosures to consumers about their data collection, use and sharing practices, and allows consumers to opt out of selling their data to third parties and provides a new cause of action for data breaches. Further, on November 3, 2020, the California Privacy Rights Act (the “CPRA”) was voted into law by California residents. The CPRA significantly amends the CCPA, and imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. It also creates a new California data protection agency specifically tasked to enforce the law, which could result in increased regulatory scrutiny of businesses conducting activities in California in the areas of data protection and security. The substantive requirements for businesses subject to the CPRA went into effect on January 1, 2023, and will be enforced effective from July 1, 2023. Other states in which we operate have also enacted laws similar to CPRA and similar laws have been proposed in other states and at the federal level, and if passed, such laws may have potentially conflicting requirements that would make compliance challenging. Additionally, the Federal Trade Commission (the “FTC”) and many state attorneys general are interpreting federal and state consumer protection laws to impose

standards for the online collection, use, dissemination and security of data. Consumer protection laws require us to publish statements that describe how we handle personal data and choices individuals may have about the way we handle their personal data. If such information that we publish is considered untrue, we may be subject to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Further, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal data secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. Each of these privacy, security, and data protection laws and regulations, and any other such changes or new laws or regulations, could impose significant limitations, require changes to our business, impose fines and other penalties or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct. Any such changes could compromise our ability to develop an adequate marketing strategy and pursue our growth strategy effectively, which, in turn, could adversely affect our business, financial condition, and results of operations.

We face the risk of litigation resulting from unauthorized text messages sent in violation of the Telephone Consumer Protection Act.

We send short message service, or SMS, text messages to customers and job candidates. The actual or perceived improper sending of text messages may subject us to potential risks, including liabilities or claims relating to consumer protection laws. For example, the Telephone Consumer Protection Act of 1991, a federal statute that protects consumers from unwanted telephone calls, faxes, and text messages, restricts telemarketing and the use of automated SMS text messages without proper consent. Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct SMS texting programs, with many resulting in multi-million-dollar settlements to the plaintiffs. Federal or state regulatory authorities or private litigants may claim that the notices and disclosures we provide, form of consents we obtain, or our SMS texting practices are not adequate or violate applicable law, resulting in civil claims against us. While we strive to comply with all applicable laws and regulations, the scope and interpretation of the laws that are or may be applicable to the delivery of text messages are continuously evolving and developing. If we do not comply with these laws or regulations or if we become liable under these laws or regulations, we could face direct liability, could be required to change some portions of our business model, or could face negative publicity, and our business, financial condition, and results of operations could be adversely affected as a result. Even an unsuccessful challenge of our SMS texting practices by our customers, regulatory authorities, or other third parties could result in negative publicity and could require a costly response from and defense by us.

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

Factors that may cause our operating results to fluctuate include:

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

•Our ability to increase the number of visitors to our websites, or our ability to convert visitors to our websites into customers;

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

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

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

•Increased competition within our market niche;

•Price competition;

•New products introduced to the market, including generics;

•Increases in the cost of advertising;

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

•Potential disruption to the distribution network;

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

•The impact of further outbreaks of COVID-19, and any future similar outbreak, on our business operations and generally on the economy, including the measures taken by governmental authorities to address it;

•Unfavorable general economic trends; and

•Tariffs

Our annual and quarterly operating results have fluctuated in the past and may fluctuate significantly in the future due to a variety of factors, including weather, many of which are out of our control. Any change in one or more of these factors could materially adversely affect our financial condition and results of operations in future periods.

Uncertainties in economic conditions and their impact on consumer spending patterns could adversely impact our business, financial condition, and results of operations.

Our results of operations are sensitive to changes in certain macro-economic conditions that impact consumer spending on pet products and services. Some of the factors that may affect consumer spending on pet products and services include consumer confidence, levels of unemployment, inflation, interest rates, tax rates and general uncertainty regarding the overall future economic environment. We may experience declines in sales or changes in the types of products sold during economic downturns. Any material decline in the amount of consumer spending or other adverse economic changes could reduce our sales, and a decrease in the sales of higher-margin products could reduce profitability and, in each case, harm our business, financial condition, and results of operations.

We have grown, and continue to seek to grow our business through acquisitions of, or investments in, new or complementary businesses, facilities, technologies, offerings, or products, or through strategic alliances, and the failure to manage these acquisitions, investments, or other strategic alliances, or to integrate them with our existing business, could have a material adverse effect on us.

During the past two years, we acquired one company (PetCareRx) and entered into a strategic partnership to enable us to offer telehealth services to our customers. We expect that we may in the future consider additional opportunities to acquire or make investments in new or complementary businesses, facilities, technologies, offerings, or products, or enter into other strategic alliances, which may enhance our capabilities, complement our current products and services or expand the breadth of our markets. Acquisitions, investments and other strategic alliances, involve numerous risks, including:

•problems integrating the acquired business, facilities, technologies or products, including issues maintaining uniform standards, procedures, controls and policies;

•unanticipated costs associated with acquisitions, investments or strategic alliances;

•losses we may incur as a result of declines in the value of an investment or as a result of incorporating an investee’s financial performance into our financial results;

•diversion of management’s attention from our existing business;

•risks associated with entering new markets in which we may have limited or no experience;

•the risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face;

•potential unknown liabilities associated with a business we acquire or in which we invest; and

•increased legal and accounting compliance costs.

Our ability to successfully grow through strategic transactions depends upon our ability to identify, negotiate, complete and integrate suitable target businesses, facilities, technologies, products and services. These efforts could be expensive and time-consuming and may disrupt our ongoing business and prevent management from focusing on our operations. Also, our acquisitions may not result in the benefits or growth originally anticipated from such acquisitions. As a result of future strategic transactions, we might need to issue additional equity securities, spend our cash, or incur debt (which may only be available on unfavorable terms, if at all) or contingent liabilities, any of which could reduce our profitability and harm our business. If we are unable to identify suitable acquisitions, investments or strategic relationships, or if we are unable to integrate any acquired businesses, facilities, technologies, offerings and products effectively, our business, financial condition, and results of operations could be materially and adversely affected. Also, while we employ several different methodologies to assess potential business opportunities, the new businesses or investments may not meet or exceed our expectations or desired objectives in the timeframe expected.

The market for pet telemedicine is immature and uncertain. If the telemedicine market does not develop, develops more slowly than we expect, or encounters negative publicity, or if our approach does not achieve a high level of customer acceptance, the growth and results of our partnership with Vetster may be adversely affected which could result in an impairment of our investment.

It is uncertain whether the telemedicine market and our approach to pet telehealth with our partners in that industry will achieve and sustain high levels of demand, consumer acceptance and market adoption. The COVID-19 pandemic

increased acceptance and utilization of telemedicine services, but it is uncertain whether such increase in demand will continue.

Demand for pet telemedicine and telehealth services is affected by a number of factors, many of which are beyond our control. Some of these potential factors include:

•market adoption and ongoing usage of pet telehealth and telemedicine services and solutions;

•awareness and adoption of technology in healthcare generally;

•availability of products and services that compete with ours;

•ability to maintain and expand a network of qualified providers;

•ease of adoption and use;

•features and platform experience;

•performance;

•brand;

•security and privacy; and

•pricing.

Our success will depend to a substantial extent on the willingness of our customers to use, and to increase the frequency and extent of their utilization of, our solution being offered in conjunction with our telehealth partners as well as on our ability to demonstrate the value of pet telehealth and telemedicine to veterinarians and pet owners. Negative publicity concerning the pet telehealth and telemedicine market could limit market acceptance of our solutions and services.

Evolving foreign trade policy by the United States or other countries or the imposition of tariffs on imported goods may affect our business.

Some of the products that we offer are purchased from vendors located outside of the United States and other vendors that we purchase from depend on other vendors located outside of the United States. These threatened or imposed tariffs and any retaliatory actions taken by other countries could result in us incurring additional costs to procure some of the merchandise we offer and may require us to raise prices on certain products. While the scope and duration of any current or future tariffs remain uncertain, tariffs imposed by the U.S. or other governments could negatively impact our financial condition and results of operations.

Financial Risks

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

We accept payments using a variety of methods, including credit and debit cards, PayPal and Apple Pay, and we may offer new payment options over time. Acceptance of these payment options subjects us to rules, regulations, contractual obligations and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules governing electronic funds transfers. These requirements may change over time or be reinterpreted, making compliance more difficult or costly. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs.

We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, and other forms of electronic payment. If these companies become unable to provide these services to us, or if their systems are compromised, it could potentially disrupt our business. The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment systems. If we fail to comply with applicable rules or requirements for the payment methods we accept, or if payment-related data is compromised due to a breach or misuse of data, we may be liable for costs incurred by payment card issuing banks and other third parties or subject to fines and higher transaction fees, or our ability to accept or facilitate certain types of payments may be impaired. As a result, our business and operating results could be adversely affected.

We have identified material weaknesses in our internal controls over financial reporting, and management has determined that our disclosure controls and procedures were not effective as of the end of the period covered by this Annual Report on

Form 10-K. Our business and share price may be adversely affected if we fail to implement and maintain effective disclosure controls and procedures and internal control over financial reporting.

For the periods ended March 31, 2024 and 2025, our management identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weakness identified in our internal control over financial reporting as of March 31, 2025, as well as our remediation plans, are described in Part II, Item 9A, “Controls and Procedures.” While we believe these efforts will be sufficient to remediate the material weakness, we cannot provide assurance that we will be able to complete our evaluation, testing or any required remediation in a timely fashion, or at all. The effectiveness of our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human error and the risk of fraud. Because of the inherent limitations in a cost-effective control system, misstatements in our financial statements due to error or fraud may occur and require restatement, such as those errors that resulted in the restatement of our previously issued audited consolidated financial statements described in this Comprehensive Form 10-K, Amendment No.1 on Form 10-K/A to our Annual Report on Form 10-K for the year ended March 31, 2023 (the “2023 Form 10-K/A”), and the restatement of our previously issued unaudited condensed consolidated financial statements described in Amendment No.1 on Form 10-Q/A to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “2024 Q1 Form 10-Q/A”) and Amendment No.1 on Form 10-Q/A to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (the “2024 Q2 Form 10-Q/A”, and together with the 2024 Q1 Form 10-Q/A and 2023 Form 10-K/A, the “Amended Reports”) as well as fiscal 2023 amounts restated in our Quarterly Report on Form 10-Q for the three and nine months ended December 31, 2023.

The material weaknesses in our internal control over financial reporting will not be considered remediated until the controls operate for a sufficient period and management has concluded through testing that these controls operate effectively. If we are unable to remediate the material weaknesses or identify additional material weakness in the future, we may be unable to accurately report our financial results, which could cause our financial results to be materially misstated and require restatement. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements. Ineffective disclosure controls and procedures and internal control over financial reporting could also result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, harm to our reputation and financial condition, diversion of financial and management resources from the operation of our business, and the market price of our common stock may decline as a result. We cannot assure you that the remediation measures we have taken to date, or any measures that we may take in the future, will be sufficient to avoid future material weaknesses.

We may face litigation and other risks as a result of the restatements described in this Comprehensive Form 10-K and the Amended Reports and material weaknesses in our internal control over financial reporting.

We have identified material weaknesses in our internal control over financial reporting, including in connection with the restatements described in this Comprehensive Form 10-K and the Amended Reports. As a result of such material weaknesses and the restatement, we could face regulatory action by the SEC or other regulatory authorities, potential litigation, or other disputes, including claims invoking federal and state securities laws, contractual claims or other claims arising from the restatement and the material weaknesses in our internal control over financial reporting and the preparation of our financial statements. Any such litigation or dispute, whether successful or not, could adversely affect our business, financial condition, and results of operations.

Risks Relating to Taxes

Taxing authorities may successfully assert that we should have collected, or in the future should collect, sales and use, value added, or similar taxes, and any such assessments could adversely affect our business, financial condition, and results of operations.

In the past several years, states have adopted laws that attempt to impose tax collection obligations on out-of-state companies. In 2018, the Supreme Court of the United States ("Supreme Court") ruled in South Dakota v. Wayfair, Inc. et al, or Wayfair, that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may adopt, or begin to enforce, laws

requiring us to register, calculate, collect, and remit taxes on sales in their jurisdictions. Additionally, states and some local tax jurisdictions have differing rules and regulations governing sales and use taxes, which are subject to varying interpretations that may change over time.

One or more taxing authorities could seek to impose additional sales and use, value added, or similar taxes on us or may determine that such taxes should have, but have not been, paid by us. Any successful action by taxing authorities to compel us to collect and remit such taxes, either retroactively or prospectively, could have a material adverse effect on our business, financial condition and results of operations. The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could have a material adverse effect on our business and results of operations.

While we believe that we currently collect and remit applicable sales taxes to the extent required in all states in which we sell, a successful assertion by one or more states seeking to tax us on sales that occurred in prior tax years, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.

New legislation or regulations, the application of laws and regulations from jurisdictions, or the application of existing laws and regulations to the Internet and commercial online services could similarly result in significant additional taxes on our business. For instance, the Supreme Court’s decision and the enactment and enforcement of laws resulting therefrom could also impact where we are required to file state income taxes. As a result, our effective income tax rate as well as the cost and growth of our business could be materially and adversely affected, which could in turn have a material adverse effect on our financial condition and results of operations. In addition, because the Company’s products and services are available over the Internet, states may claim that the Company is required to do business as a foreign corporation in one or more of those jurisdictions. Failure to qualify as a foreign corporation in a jurisdiction where the Company is required to do so could subject it to taxes and penalties, and such jurisdictions may charge the Company with violations of local laws.

Changes in tax laws or regulations in the various tax jurisdictions we are subject to could increase our cost of doing business.

We may be subject to additional tax liabilities and penalties resulting from new legislation or regulations; changes in taxing jurisdictions’ administrative interpretations, decisions, policies and positions; results of tax audits, examinations, settlements or judicial decisions; changes in accounting principles, as well as the evaluation of new information that results in a change to a tax position taken in a prior period; and changes to our business operations, including acquisitions. Any resulting increase in our tax obligation or cash taxes paid could adversely affect our cash flows and financial results.

Industry Risks

We face significant competition from veterinarians and online and traditional retailers, as well as challenges from strategic alliances amongst our competitors, and may not be able to compete profitably with them.

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

Product recalls and concerns regarding the safety and quality of the pet products we sell could affect our business.

We are subject to laws and regulations by various federal and state regulatory authorities regarding the safety and quality of the pet products that we sell. We purchase products from various suppliers, one or more of which might not adhere to product safety requirements or our quality control standards, and we may not be able to identify the deficiency before merchandise ships to our customers. All of our suppliers are required to comply with applicable product safety laws, and we are dependent upon them to ensure such compliance. Any issues of product safety or allegations that the products we sell are in violation of governmental regulations, including, but not limited to, issues involving products manufactured in foreign countries or issues of mislabeling or adulteration, could cause those products to be recalled. If our suppliers fail to manufacture or import merchandise that adheres to our quality control standards, product safety requirements, or applicable governmental regulations, our reputation and brands could be damaged, potentially leading to decreased sales or increases in customer litigation against us. If consumers lose confidence in the safety and quality of the food or other products that we sell or in the suppliers that provide such products, then our sales could be adversely affected. Adverse publicity about these types of concerns, even if not valid, may discourage consumers from buying the products we offer, and such publicity cause disruptions with suppliers. The real or perceived sale of contaminated food products by us could result in product liability claims against our suppliers or us, expose us or our suppliers to governmental enforcement action or private litigation, or lead to costly recalls and a loss of consumer confidence, any of which could have an adverse effect on our business, financial condition, and results of operations. We may also in the future voluntarily recall or withdraw products that we consider do not meet our standards in order to protect our brands and reputation. While we carry product liability insurance, our insurance may not be adequate to cover all liabilities that we may incur in connection with product liability claims. In addition, we may be unable to continue to maintain our existing insurance coverage or obtain comparable insurance at a reasonable cost, if at all, or secure additional coverage, which may result in future product liability claims being uninsured. Any of these factors could negatively impact our business, financial condition, and results of operations.

Pandemics or other health crises, such as the possible resurgence of the COVID-19 pandemic, may adversely affect our results of operations.

The outbreak and global spread of the COVID-19 pandemic, including the spread of recent variants, and related containment efforts created, and may continue to contribute to, significant economic disruption in the United States and around the world. A resurgence of the COVID-19 pandemic, variations of the COVID-19 virus, or other pandemics could adversely affect our business operations. It is impossible to predict the effect and ultimate impact of the possible resurgence of the COVID-19 pandemic, a variation of the COVID-19 virus, or other pandemic. In response to the COVID-19 pandemic, we implemented working from home where possible and enhanced disinfection and social distancing within our workplace. Future COVID-19 surges or variants, as well as other pandemics, may result in us again encouraging employees to work from home, which could adversely impact costs, operations, and morale, as well as result in consumer privacy, IT security, and fraud concerns.

Governmental lockdowns and other restrictions at the onset of the COVID-19 pandemic negatively impacted, and in the event of a future resurgence or a different pandemic or health crisis may again negatively impact, the operations of and ability to ship from our fulfillment center. Our future results of operations and overall financial performance could be uncertain should a new virus strain of COVID-19, a new pandemic, or other health crisis occur.

Securities Risks

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

The market price of our common stock may fluctuate significantly in response to a number of factors, many of which are out of our control. These factors include: changes in accounting treatments or principles; announcements by our competitors of new products and services offerings; significant contracts, acquisitions, or strategic relationships; additions or departures of key personnel; any future sales of our common stock or other securities; stock market price and volume fluctuations of publicly traded companies; and general political, economic, and market conditions. In some future quarter our operating results may fall below the expectations of securities analysts and investors, which could result in a decrease in the trading price of our common stock. In addition, if the Company fails to meet expectations related to future growth, profitability, dividends, or other market expectations, the price of the Company’s common stock may decline significantly,

which could have a material adverse impact on investor confidence and employee retention. In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities. We may be the target of similar litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources, which could seriously harm our business and operating results.

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

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

Actions of activist stockholders could be disruptive and costly and could adversely affect our results of operations, financial condition, and/or share price

While we strive to maintain constructive communications with our stockholders, we may, from time to time, be subject to demands from activist stockholders. Any activist campaign against the Company that contests, conflicts with, or seeks to change, our board composition, leadership, strategic direction, or business mix could have an adverse effect on us because: (i) responding to actions by activist stockholders could disrupt our operations, be costly or time-consuming, or divert the attention of our board of directors and senior management from their regular duties, which could adversely affect our results of operations or financial condition; (ii) perceived uncertainties as to our future direction, including as a result of possible changes to the composition of our board, may lead to the perception of a change in the direction of the business or lack of continuity, any of which may be exploited by our competitors, cause concern to our customers, employees, and/or business partners and result in the loss of potential business opportunities, or make it more difficult to attract and retain qualified personnel and business partners, and may adversely affect our relationships with vendors, customers, business partners, and other third parties; (iii) these types of actions could cause significant fluctuations in our share price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business; and (iv) if individuals are elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create additional value for our stockholders.

Our ability to pay regular dividends to our shareholders and the amounts of any such dividends are subject to the discretion of the Board and may be limited by our financial condition, or limitations under Florida law.

We paid regular dividends to our shareholders from 2009 to August 2023, and on February 1, 2024, our Board of Directors elected to suspend the quarterly dividend indefinitely. The Board of Directors determined to reserve and/or utilize cash resources that would otherwise be available for distributions in order to fund additional strategic transactions or investments in our business. The determination to pay dividends and the amounts thereof in the future will be at the discretion of the Board and will be dependent on then-existing conditions, including our financial condition, income, legal requirements, including limitations under Florida law, and other factors the Board deems relevant. For these reasons, shareholders should not rely on dividends to receive a return on investment. Accordingly, and for the foreseeable future, realization of any gain on shares of our common stock will depend solely on the appreciation of the price of our common stock, which may not occur.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

PetMed Express, Inc. (“PetMeds”) and PetCareRx maintains an enterprise-wide cybersecurity program designed to identify, assess, manage, and mitigate information security risks across the organization. Our program encompasses

governance, policy, prevention, detection, incident response, and recovery mechanisms in alignment with industry standards.

Cybersecurity Risk Management and Oversight

Our cybersecurity risk management program is built to protect our systems, data, and customers from a wide range of cyber threats. This includes internal protocols and controls, as well as third-party oversight. Our cybersecurity practices are guided by the National Institute of Standards and Technology (NIST) CSF (Cyber Security Framework), and categorizes cybersecurity tasks into five key functions: identify, protect, detect, respond, and recover. This functional orientation helps organizations make informed decisions about reducing cyberattacks.

Oversight of cybersecurity risk is formally overseen by the Audit Committee of our Board of Directors. The Audit Committee receives regular briefings from management on cybersecurity topics, including strategy, threats, incident trends, remediation activities, and updates on material developments, as appropriate.

Incident Detection and Response

We have implemented an Incident Response Policy and detailed procedures that govern how potential cybersecurity events are identified, escalated, investigated, contained, and remediated. The objectives of our incident response program include:

•Timely investigation and validation of incidents

•Minimization of data loss or service disruption

•Evidence preservation in accordance with legal and regulatory requirements

•Restoration of affected systems and services

•Post-incident review and implementation of corrective actions

•Notification to affected parties and regulators, where appropriate

These procedures are tested and exercised periodically to ensure preparedness and adaptability.

Security Measures and Monitoring

We deploy a layered defense model using widely adopted technologies and internal solutions for threat monitoring, detection, and response. Our efforts include:

•Regular system scans, vulnerability assessments, and penetration testing

•Ongoing compliance with the Payment Card Industry Data Security Standard (PCI DSS)

•Deployment of endpoint detection and response (EDR) tools and real-time monitoring solutions

•Secure development practices and controls embedded within our digital transformation initiatives

As we modernize our digital platforms and phase out legacy systems, we are embedding advanced security practices into our infrastructure. This includes improving controls around identity management, access, encryption, and software development life cycles.

Third-Party and Vendor Risk Management

Our vendor and partner management processes include security due diligence, contractually required safeguards, and—in relevant cases—direct review of their cybersecurity practices. We require certain vendors with access to sensitive systems or data to undergo security training or meet specific security certification requirements.

Training and Awareness

Cybersecurity awareness is a foundational element of our risk management approach. We conduct recurring cybersecurity training for employees across the company, with tailored modules that address evolving threat vectors such as phishing, ransomware, and social engineering. Additional targeted training is provided to users in high-risk roles.

Cybersecurity Incidents

We maintain an active process to detect and respond to cybersecurity incidents. While we have experienced routine threats and minor incidents in the normal course of operations, to date, we have not identified any cybersecurity incidents that have materially impacted our business, operations, or financial results.

Nevertheless, we recognize that cybersecurity risks are dynamic and continually evolving. We cannot guarantee that future events will not have a material impact. For more information on cybersecurity-related risks, see Item 1A, “Risk Factors”, including the risk titled: “Our failure or the failure of third-party service providers to protect our websites, networks, and systems against cybersecurity incidents, or otherwise to protect our confidential information, could damage our reputation and brands and substantially harm our business, financial condition, and results of operations.”

ITEM 2. PROPERTIES

We own our principal executive offices and distribution center, which are located at 420 South Congress Avenue, Delray Beach, Florida 33445 (the “Delray Beach Property”). The Delray Beach Property consists of approximately 634,000 square feet of land or 14.6 acres with two building complexes totaling approximately 185,000 square feet, with additional land for future use. The first building complex consists of approximately 125,000 square feet and the second building complex consists of approximately 60,000 square feet each consisting of both office and warehouse space. The Company occupies approximately 97,000 square feet of the first building for its principal offices and distribution center. As of March 31, 2025, 48% of the Delray Beach Property was leased to two tenants with a remaining weighted average lease term of 5.2 years. We believe that our facilities are sufficient for our current needs and are in good condition in all material respects.

In connection with our acquisition of PetCareRx, in April 2023 we assumed the leases of two buildings occupied by PetCareRx located in Lynbrook, New York. These facilities, which aggregate approximately 32,000 square feet, are used by PetCareRx as a shipping and fulfillment center and as an executive office. The leases expire in April 2027 and include the option to renew for an additional five years.

ITEM 3. LEGAL PROCEEDINGS

We are involved from time to time in various claims and lawsuits in the ordinary course of business, including claims related to products, product warranties, contracts, employment, intellectual property, consumer protection, pharmacy and other regulatory matters. We have settled complaints that had been filed with various states’ pharmacy boards in the past. There can be no assurances made that other states will not attempt to take similar actions against us in the future. We also initiate litigation to protect our trade or service marks. There can be no assurance that we will be successful in protecting our trade or service marks. In the opinion of management, none of the claims and suits, either individually or in the aggregate, are reasonably likely to have a material adverse effect on our operations or consolidated financial statements. Legal costs related to the above matters are expensed as incurred.

On April 18, 2024, Plaintiff Timothy Fitchett (“Plaintiff”) filed an action against the Company in the Court of Common Pleas of Allegheny County, Pennsylvania, on behalf of himself and on behalf of a class of others similarly situated. Plaintiff alleges that the Company violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law by representing “reg.” prices for products which the Company allegedly never charged for those products. On May 13, 2024, the Company removed the matter to the U.S. District Court for the Western District of Pennsylvania in Pittsburgh. The Company successfully opposed the Plaintiff's motion to remand the case back to the Court of Common Pleas. On the face of the Complaint, Plaintiff is seeking damages for himself in the amount of the allegedly illusory discounts he allegedly believed he was receiving when purchasing products from the Company or, in the alternative, a complete refund of amounts he paid to the Company, and he is also seeking a liability determination for members of the proposed class. The Company denies liability in this matter and intends to defend the action accordingly. The Company cannot determine materiality or estimate a range of potential liability, if any, at this time if the Company were determined to be liable.

On February 14, 2025, Plaintiffs Ashley Bird, Tyler Dvornski, and Tiffany Hughes (“Plaintiffs”) filed an action in the Northern District of New York on behalf of themselves and a class of others similarly situated alleging that the Company misrepresented that its products were on sale by showing a “regular” strikethrough price, when the products were never sold for the strikethrough price. Plaintiffs allege that by using this “false reference price” or “false discount,” the Company artificially inflated its prices and charged consumers more than it otherwise could. Plaintiffs allege that these purported practices violate New York General Business Law §§ 349 and 350 as well as California’s Unfair Competition Law and California’s False Advertising Law. After the Company made a motion to dismiss the complaint, Plaintiffs filed an amended complaint. The Company notified the court that it intends to file a motion to dismiss the amended complaint. The Company denies liability in this matter and intends to defend the action accordingly. The Company cannot determine materiality or estimate a range of potential liability, if any, at this time if the Company were determined to be liable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

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

Market Information

Our common stock is traded on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “PETS.”

Holders

There were 75 active holders of record of our common stock on September 30, 2025.

Dividend Policy

We paid cash dividends on a quarterly basis from August 2009 to August 2023. For the fiscal years ended March 31, 2025 and 2024, we declared and paid cash dividends totaling zero and $12.7 million (an aggregate of $0.60 per share for the year ended March 31, 2024), respectively.

On October 26, 2023, our Board of Directors elected to suspend the quarterly dividend for the second quarter of fiscal year 2024, and on February 1, 2024, our Board of Directors elected to suspend the quarterly dividend indefinitely. This move is intended to focus use of the Company’s existing cash flow on growth and other higher return initiatives. The Board of Directors reviews and discusses the capital allocation needs of the Company, at a minimum, on a quarterly basis. The declaration and payment of future dividends is discretionary and will be subject to a determination by the Board of Directors. When considering whether to declare a dividend, our Board of Directors will take into account:

• General economic and business conditions;

• Our financial condition and operating results;

• Our available cash and current and anticipated cash needs;

• Our capital requirements;

• Strategic uses of cash for growth initiatives;

• Contractual, legal, tax and regulatory restrictions on the payment of dividends by us; and

• Such other factors as our Board of Directors may deem relevant.

Performance Graph

Set forth below is a line graph comparing the five-year cumulative performance of our common stock with the NASDAQ Composite, the Russell 2000, and S&P 500 from March 31, 2020 to March 31, 2025. The graph assumes that $100 was invested on March 31, 2020, in each of our Common Stock, the NASDAQ Composite, the Russell 2000, and the S&P 500. Because we have historically paid dividends on a quarterly basis, the graph assumes that dividends were reinvested. The performance graph and related information below shall not be deemed “filed” with the SEC, nor shall such

information be incorporated by reference into any future filing under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

Performance graph data:


	Fiscal Year Ended March 31,
	2020	2021	2022	2023	2024	2025
PetMed Express, Inc.	100.00	126.49	96.87	64.66	19.92	17.42
NASDAQ Composite	100.00	172.04	184.68	158.72	212.72	224.97
S&P 500	100.00	153.71	175.29	158.99	203.30	215.93
Russell 2000	100.00	192.57	179.53	156.32	184.25	175.46

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth securities authorized for issuance under equity compensation plans, including individual compensation arrangements, by us under our 2015 Outside Director Equity Compensation Plan, 2016 Employee Equity Compensation Restricted Stock Plan, 2022 Employee Equity Compensation Plan, 2024 Omnibus Incentive Plan and 2024 Inducement Incentive Plan as of March 31, 2025:


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights	Number of securities remaining available for further issuance under equity compensation plans

Equity Compensation Plans Approved by Equity Holders
2015 Outside Director Equity Compensation Plan	22,316	(2)	—	—

2016 Employee Equity Compensation Restricted Stock Plan	—		—	—

2022 Employee Equity Compensation Plan	568,416		—	—

2024 Omnibus Incentive Plan	467,794	(3)	—	1,233,410	(1)

Total	1,058,526			1,233,410

Equity Compensation Plans Not Approved by Equity Holders
2024 Inducement Incentive Plan	290,000		—	60,000

Total for All Plans	1,348,526		—	1,293,410

(1) On the August 8, 2024 adoption date of the 2024 Omnibus Incentive plan, the shares then available for future grant under 2015 Outside Director Equity Compensation Plan and 2022 Employee Equity Compensation Plan were added to the initial reserve under the 2024 Omnibus Incentive Plan.

(2) Consists of restricted stock units.

(3) Consists of 321,022 restricted stock units and 146,772 performance stock units.

ITEM 6. [RESERVED]

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

Executive Summary

PetMed Express, Inc. and subsidiaries, d/b/a PetMeds® (the "Company", "we", "us", or "our") is a leading nationwide direct-to-consumer pet pharmacy and online provider of prescription and non-prescription medications, foods, supplements, supplies and vet services for dogs, cats, and horses. PetMeds markets and sells directly to consumers through its websites, toll-free numbers, and mobile application. We offer consumers an attractive alternative for obtaining pet medications, foods, and supplies in terms of convenience, price, speed of delivery, and valued customer service.

Founded in 1996, our executive headquarters offices are currently located at 420 South Congress Avenue, Delray Beach, Florida 33445, and our telephone number is (561) 526-4444. We have a March 31 fiscal year end.

Presently, our product line includes approximately 10,000 of the most popular pet medications, health products, and supplies for dogs, cats, and horses.

We market our products through national advertising campaigns which aim to increase the recognition of the “PetMeds” brand name and "PetCareRx" brand name, increase traffic on our websites at www.petmeds.com and www.petcarerx.com, acquire new customers, and maximize repeat purchases. Our sales consist of products sold mainly to retail consumers. The twelve-month average purchase increased slightly at approximately $97 and $94 per order for the fiscal years ended March 31, 2025, and March 31, 2024, respectively.

Restatement

As described in the Explanatory Note above and in Note 18 to our consolidated financial statements, we have restated our consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Affected Periods.

Completion of Audit Committee Investigation

On October 7, 2025, the Company publicly reported the conclusion of the previously disclosed investigation by the Audit Committee of the Company’s Board of Directors (the “Audit Committee”). As previously reported, the Company was unable to file, within the prescribed time period, its Annual Report on Form 10-K for the fiscal year ended March 31, 2025, following the commencement of an investigation by the Audit Committee that was originally disclosed in the Company’s Current Report on Form 8-K filed on July 1, 2025. The Audit Committee, assisted by outside legal counsel, Foley & Lardner LLP, and forensic accountants, BDO USA, P.C., conducted during June through August 2025 an investigation into allegations raised by two separate reports submitted anonymously through the Company’s third-party-administered whistleblower hotline on April 15 and 16, 2025 regarding (i) the timing of revenue recognition with respect to certain AutoShip orders in the fiscal fourth quarter of 2025, some of which resulted in customer complaints; (ii) a fiscal fourth quarter 2025 $50 coupon promotion to customers and whether it was motivated to any extent by its potential impact on Company KPIs regarding new customers; and (iii) the Company’s culture and control environment. The investigation’s scope also ultimately included additional matters identified during the course of the investigation.

The Audit Committee’s primary investigative findings in the investigation included the following:

(i) The Company accelerated shipment of products to AutoShip customers from the fourth quarter of fiscal year 2025 (i.e., the quarter ending March 31, 2025) to the third quarter of fiscal year 2025 (i.e., the quarter ending December 31, 2024) (the “December Accelerated Shipments”) and again from the first quarter of fiscal year 2026 (i.e., the quarter ending June 30, 2025) to the fourth quarter of fiscal year 2025 (i.e., the quarter ending March 31, 2025) (the “March Accelerated Shipments”). The acceleration of shipments did not comply with certain provisions of the Company’s AutoShip Terms & Conditions with their customers. As a result, the Company erroneously recorded $133,189 in revenue associated with the December Accelerated Shipments in the quarter ending December 31, 2024 of fiscal year 2025 and $1,101,151 in revenue associated with the March Accelerated Shipments in its financial statements for the quarter ending March 31, 2025. Management has corrected the March Accelerated Shipments error prior to the filing this Annual Report on Form 10-K.

(ii) On March 21, 2025, the Company issued a $50 coupon with the objective of attracting new customers to its website and encouraging previous customers who had not recently placed an order to do so. When initially launched, the coupon did not contain a minimum purchase requirement, but a $100 minimum was later added after management noted excessive use of the coupon. The coupon was utilized in the placement of approximately 30,000 total orders, only

approximately 74 of which had a net sale amount (sale amount less coupon value) of $0. Prior to the investigation, management had erroneously recorded in its financial statements for the quarter ending March 31, 2025, $2,451 in expenses for the 74 orders with no net sales amount to cost of goods sold rather than to marketing expense. The Audit Committee found that the inclusion of customers with zero net sales did not have a material impact on the Company’s new customer KPI.

(iii) The Company’s former Chief Executive Officer, Sandra Campos, hired her nephew for a mid-level position and did not follow the Company’s employee handbook as a result of her failing to inform the Company of the family relationship at the time of her nephew’s hiring and in having the nephew report directly to her for a period of time.

(iv) Although the Audit Committee did not find that the Company’s culture fostered an environment that discouraged employees from raising concerns, the Audit Committee did find that certain members of management were concerned about the speed with which business decisions were made and the lack of adequate time to evaluate them.

(v) The former Audit Committee Chair (Diana Purcel) and the former Chief Financial Officer (Robyn D’Elia) did not report the whistleblower complaints (referenced above) to the Company’s external auditors on a timely basis.

(vi) In April 2025, the Company accrued $711,897 for cooperative marketing funds for the fourth quarter ended March 31, 2025 believed to be due from a vendor in connection with marketing services provided by the Company pursuant to the Company’s Retail Reseller Agreement with the vendor. Based on management’s communications to clarify the amount with the vendor during the investigation, this accrual was determined to be erroneous and to have resulted from management’s misunderstanding of an oral agreement with the vendor. In August 2025, after confirming with the vendor the amounts that the vendor did agree to pay, management corrected the error prior to the filing of its financial statements by reducing its other current assets and increased marketing expense by $287,000 for the quarter ended March 31, 2025.

In its investigation, the Audit Committee identified certain conduct that was determined to be inconsistent with the Company’s Code of Business Conduct & Ethics and related policies involving certain members of management. The Audit Committee referred these matters to the Board of Directors of the Company for appropriate action and discipline.

The Board of Directors, as part of its remediation plan to foster a tone at the top that exemplifies a culture of commitment to the principles set forth in the Company’s Code of Business Conduct and Ethics, requested and accepted the resignations of the former Chief Executive Officer (Sandra Campos) and the former Chief Financial Officer (Robyn D’Elia) and approved and entered into mutual separation agreements with Ms. Campos and Ms. D’Elia on August 11, 2025, as reported in a Current Report on Form 8-K filed by the Company on August 12, 2025. Also, the Board of Directors requested and accepted the resignation of the former Chair of the Audit Committee (Diana Purcel), and such resignation was previously reported in the Current Report on Form 8-K filed by the Company on July 28, 2025.

As a result of the findings in the investigation, the Audit Committee made a number of recommendations which the Board of Directors has adopted, including: replacement of the Chief Executive Officer, Chief Financial Officer, and Chair of the Audit Committee; implementation of additional and enhanced policies, procedures, and training on the Company’s Code of Ethics & Conduct; correction of certain accounting errors as described above; and strengthening the Company’s internal controls over financial reporting and operations related to the matters investigated. The Company has reported in Item 9A of this Annual Report on Form 10-K material weaknesses in internal controls over financial reporting in connection with the findings of the investigation.

Restatement

As described in the Note 1 of “Notes to Consolidated Financial Statements,” we have restated our consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for the years ended March 31, 2024 and 2023 and the interim periods in those years and for the quarters ended June 30, 2024, September 30, 2024, and December 31, 2024.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and the results of our operations contained herein are based upon our consolidated financial statements and the data used to prepare them. Our 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. See Note (2) - Summary of Significant Accounting Policies, in the "Notes to Consolidated Financial Statements" included in Part II, Item 8, Financial Statements and Supplementary Data, of this 10-K Report for a description of our significant accounting policies as well as a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this 10-K Report.

We believe that the estimates, assumptions and judgments involved in the accounting policies described below involve a significant level of estimation uncertainty and have the greatest potential impact on our financial condition and results of operations and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates, assumptions, and judgments on an ongoing basis. Our actual results may differ from these estimates under different assumptions, judgments, and conditions.

Revenue recognition

We account for revenue under ASC Topic 606 ("Revenue from Contracts with Customers") and generate revenue by selling pet medication products and pet supplies mainly to retail customers. Certain pet supplies offered on our website are drop shipped to customers. We consider ourself the principal in the arrangement because we control the specified good before it is transferred to the customer. Revenue contracts contain one performance obligation, which is delivery of the product; customer care and support is deemed not to be a material right to the contract. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are estimated based on historical patterns, however this is not considered a key judgment. There are no amounts excluded from the variable consideration. Revenue is recognized when control transfers to the customer at the point in time in which the shipment of the product occurs. This key judgment is determined as the shipping point, which represents the point in time where we have a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership.

Outbound shipping and handling fees are an accounting policy election and are included in sales as we consider ourself the principal in the arrangement given responsibility for supplier selection and discretion over pricing. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales.

Membership fees represent the amounts recognized periodically from two membership models. The first is the PetPlus membership for PetCareRx customers, and the second is a partner membership provided through PetCareRx. These memberships provide discounted pricing, free standard shipping, veterinary telehealth services and local Caremark Pharmacy prescription pickup which represent a single stand-ready performance obligation to provide these benefits. The PetPlus membership fee is an upfront annual charge and automatically renews one year from the initial enrollment date. The Company recognizes the revenue ratably over the term of the PetPlus membership which is generally one year.

Virtually all of our sales are paid by credit cards and we usually receive the cash settlement in two to three banking days. Credit card sales minimize accounts receivable balances relative to sales. We had no material contract asset or contract liability balances as of March 31, 2025, or March 31, 2024.

We maintain an allowance for credit losses that we estimate will arise from customers’ inability to make required payments, arising from either credit card chargebacks or insufficient funds checks. We determine our estimates of the uncollectability of accounts receivable by analyzing historical bad debts and current economic trends. The allowance for credit losses was approximately $91 thousand and $273 thousand at March 31, 2025 and 2024, respectively.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is not amortized but instead is tested for impairment annually on January 1, or more frequently if events or changes in circumstances indicate goodwill might be impaired. When testing goodwill for impairment by determining whether the carrying value of each reporting unit exceeds its estimated fair value. we have the option to choose whether it will apply a qualitative assessment first and then a quantitative assessment, if necessary, or to apply the

quantitative assessment directly. We have concluded that we have one reporting unit and has assigned the entire balance of goodwill to this reporting unit.

We have performed our annual goodwill impairment testing as of January 1, 2025 using a quantitative assessment and at that time concluded there was no impairment. Since January 1, 2025, our stock price decreased from $4.82 at December 31, 2024 to $4.19 at March 31, 2025. We considered the decrease in its stock price in FY 2025 to be indicative of potential risks that the carrying amount of goodwill may not be recoverable. We performed a quantitative assessment as of March 31, 2025, and concluded that goodwill was not impaired because the market capitalization, i.e. fair value determined based on our stock price (without including a control premium), of the single reporting unit exceeded its carrying value as of March 31, 2025.

Accounting for income taxes

We account 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 our consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting carrying values and the tax bases of assets and liabilities and are measured by applying enacted tax rates and laws for the taxable years in which those differences are expected to reverse. As required by “Accounting for Uncertainty in Income Taxes” guidance, which clarifies ASC Topic 740, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the Consolidated Financial Statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

We apply “Accounting for Uncertainty in Income Taxes” guidance to all tax positions for which the statute of limitations remains open. We had no liabilities for uncertain tax positions for either fiscal 2025 or fiscal 2024. We file tax returns in the U.S. federal jurisdiction and Florida, Arizona, California, Connecticut, Idaho, Maryland, Michigan, Oklahoma, South Carolina, Virginia, Wisconsin, New Jersey, Georgia, Indiana, New York and the District of Columbia. With few exceptions, we are no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years ending March 31, 2020, or earlier. Any interest and penalties related to income taxes will be recorded to other income (expenses).

Macroeconomic Factors

We monitor the effects of the macroeconomic environment and take appropriate steps to mitigate the impact on our business, employees and financial condition; however, the nature and extent of this impact in future periods remains difficult to predict due to numerous uncertainties outside our control.

Results of Operations (As Restated)

The following should be read in conjunction with our 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 our consolidated statements of income:


	Fiscal Year Ended March 31,
	2025		2024 As Restated		2023 As Restated
Sales	100.0	%	100.0	%	100.0	%
Cost of sales	69.5		69.1		69.1

Gross profit	30.5		30.9		30.9

Operating expenses:
General and administrative	17.0		20.2		16.7
Advertising	10.5		11.2		10.2
Depreciation	3.1		2.6		1.4
Impairment loss	0.5		—		—
Total operating expenses	31.1		34.0		28.3

(Loss) income from operations	(0.6)		(3.1)		2.6

Total other income	0.4		0.7		0.6

(Loss) income before provision for income taxes	(0.2)		(2.4)		3.2

Provision for income taxes	2.5		0.4		0.9

Net (loss) income	(2.7)	%	(2.8)	%	2.3	%

Non-GAAP Financial Measures

Adjusted EBITDA

To provide investors and the market with additional information regarding our financial results, we have disclosed (see below) adjusted EBITDA, a non-GAAP financial measure that we calculate as net income excluding share-based compensation expense; depreciation; income tax provision; interest income (expense); and other non-operational expenses. We have provided reconciliations below of adjusted EBITDA to net (loss) income, the most directly comparable GAAP financial measures.

We have included adjusted EBITDA, herein, because it is a key measure used by our management and Board of Directors to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and other expenses. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

We believe it is useful to exclude non-cash charges, such as share-based compensation expense and depreciation from our adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax provision and interest income (expense), as neither are components of our core business operations. We also believe that it is useful to exclude

other expenses, including the investment banking fee related to the Vetster partnership, acquisition costs related to PetCareRx, employee severance and interest expense relating to an estimated unremitted prior period state sales tax accrual as these items are not indicative of our ongoing operations. Adjusted EBITDA has limitations as a financial measure, and these non-GAAP measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•Although depreciation is a non-cash charge, the assets being depreciated may have to be replaced in the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;

•Adjusted EBITDA does not reflect share-based compensation. Share-based compensation has been, and will continue to be for the foreseeable future, a material recurring expense in our business and an important part of our compensation strategy;

•Adjusted EBITDA does not reflect interest income (expense), net; or changes in, or cash requirements for, our working capital;

•Adjusted EBITDA does not reflect transaction related costs and other items which are either not representative of our underlying operations or are incremental costs that result from an actual or planned transaction and include litigation matters, integration consulting fees, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and converging IT systems;

•Adjusted EBITDA does not reflect certain non-operating expenses including the employee severance which reduces cash available to us;

•Adjusted EBITDA does not reflect non operating expenses (income) including sales tax expense (income) relating to recording a liability for sales tax we did not collect from our customers or recognizing a gain on settlement from settling a state liability for less than recorded.

•Other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces the measures usefulness as comparative measures.

Because of these and other limitations, Adjusted EBITDA should only be considered as supplemental to, and alongside with other GAAP based financial performance measures, including various cash flow metrics, net income, net margin, and our other GAAP results.

The following table presents a reconciliation of net loss, the most directly comparable GAAP measure to Adjusted EBITDA for each of the periods indicated:


	Reconciliation of Non-GAAP Measures PetMed Express, Inc.
	Three Months Ended
($ in thousands, except percentages)	March 31, 2025		March 31, 2024 As Restated		$ Change		% Change

Consolidated Reconciliation of GAAP Net Loss to Adjusted EBITDA:

Net loss	$	(11,644)	$	(5,016)	$	(6,628)	132	%

Add (subtract):
Share-based compensation expense	593		1,674		(1,081)		(65)	%
Income taxes	5,662		1,536		4,126		269	%
Depreciation and amortization	2,074		1,895		179		9	%
Interest expense (income), net	123		(30)		153		(510)	%
Acquisition/Partnership transactions and other items	26		385		(359)		(93)	%
Employee severance	75		104		(29)		(28)	%

Impairment loss	$	1,200	$	—	$	1,200	n/m

Adjusted EBITDA	$	(1,891)	$	548	$	(2,439)	(445)	%


	Year Ended
($ in thousands, except percentages)	March 31, 2025		March 31, 2024 As Restated		$ Change		% Change

Consolidated Reconciliation of GAAP Net Loss to Adjusted EBITDA:

Net loss	$	(6,271)	$	(7,464)	$	1,193	(16)	%

Add (subtract):
Share-based compensation expense (reversal)	(6,586)		6,870		(13,456)		(196)	%
Income taxes	5,684		1,191		4,493		377	%
Depreciation and amortization	7,039		7,056		(17)		—	%
Interest (income), net	(185)		(511)		326		(64)	%
Acquisition/Partnership transactions and other items	231		1,679		(1,448)		(86)	%
Employee severance	738		512		226		44	%
Sales tax expense (reversal)	(1,178)		(1,088)		(90)		8	%
Impairment loss	1,200		$	—	1,200		n/m

Adjusted EBITDA	$	672	$	8,245	$	(7,573)	(92)	%

Fiscal 2025 Compared to Fiscal 2024 (refer to our 10-K for the fiscal year ended March 31, 2024 for Fiscal 2024 Compared to Fiscal 2023)

Sales (As Restated)

Sales decreased by approximately $47.1 million or 17.2%, to approximately $227.0 million for the fiscal year ended March 31, 2025, compared to approximately $274.1 million for the fiscal year ended March 31, 2024. The decrease in sales for the fiscal year ended March 31, 2025 reflects a strategic reduction in advertising, broader macroeconomic factors, and higher consumer promotional usage.

Reorder sales decreased by approximately $34.6 million, or 15.5%, to approximately $188.0 million for the fiscal year ended March 31, 2025, compared to approximately $222.6 million for the fiscal year ended March 31, 2024. The decrease in reorder sales for the fiscal year ended March 31, 2025 is primarily due to a decline in prescription medication sales.

New order sales decreased by approximately $10.6 million or 25.5%, to approximately $31.1 million for the fiscal year ended March 31, 2025, compared to $41.7 million for the fiscal year ended March 31, 2024. The decrease for the fiscal year ended March 31, 2025 in new order sales is primarily due to a strategic reduction in advertising.

We acquired approximately 351,000 new customers for the fiscal year ended March 31, 2025, compared to approximately 457,000 new customers for the same period in the prior year. The following chart illustrates sales by various sales classifications:


	Year Ended March 31,								Increase (Decrease)
Net Sales (In thousands)	2025		%		2024 As Restated		%		$		%

Reorder sales	$	188,017	82.8	%	$	222,578	81.2	%	$	(34,561)	-15.5	%
New order sales	31,097		13.7	%	41,734		15.2	%	(10,637)		-25.5	%
Membership fees	7,858		3.5	%	9,783		3.6	%	(1,925)		-19.7	%
Total net sales	$	226,972	100.0	%	$	274,095	100.0	%	$	(47,123)	-17.2	%

The Company changed the definition of a new order sale on July 1, 2024, to include sales from customers who have not previously ordered from the Company over the past twelve months compared to the prior definition which was thirty-six months. The reorder and new order sales amounts for the years ended March 31, 2025 reflect this new customer definition change. Under the previous definition of a new customer, reorder and new order sales were $241 million and $23.7 million, respectively, for the year ended March 31, 2024.

The Company offers an AutoShip & Save subscription program (“AutoShip”) on our website. AutoShip is a convenient way for our loyal customer base to have future pet medication orders delivered directly to them without the need to place an order each time. We are encouraged by the adoption of our AutoShip program and have seen an increasingly positive trend since we launched this program. Recurring sales, which includes AutoShip and membership revenue, as a percentage of total gross sales was 56.1% for the most recent quarter ended March 31, 2025, up from 53.5% for the same period last year and up from 56.2% sequentially in the prior quarter.

Going forward sales may be adversely affected due to increased competition and consumers giving more consideration to price. The changes in consumer behavior post pandemic makes future sales somewhat challenging to predict. No guarantees can be made that sales will continue to grow in the future.

Cost of sales (As Restated)

Cost of sales decreased by approximately $31.5 million, or 16.6% to $157.8 million for the fiscal year ended March 31, 2025, from $189.3 million for the fiscal year ended March 31, 2024. The cost of sales decrease can be directly related to the decrease in sales during fiscal year 2025. As a percentage of sales, cost of sales was 69.5% in fiscal year 2025, as compared to 69.1% in fiscal 2024. The increase in cost of sales, as a percentage of sales, for the fiscal year ended March 31, 2025 compared to the fiscal year ended March 31, 2024 was primarily due to an increase in discount activity.

Gross profit (As Restated)

Gross profit decreased by approximately $15.6 million, or 18.4%, to $69.1 million for the fiscal year ended March 31, 2025, from $84.8 million for the fiscal year ended March 31, 2024. The decrease in gross profit can be directly related to the decrease in sales and lower profit margins during fiscal 2025. Gross profit as a percentage of sales for fiscal 2025 was 30.5% compared to 30.9% for fiscal 2024. The gross profit and gross profit percentage decreased for the fiscal year ended March 31, 2025 compared to the previous fiscal year.

General and administrative expenses (As Restated)

General and administrative expenses decreased by approximately $16.6 million, or 30.0%, to $38.6 million for the fiscal year ended March 31, 2025, from $55.2 million for the fiscal year ended March 31, 2024. The decrease in general and administrative expenses for the fiscal year ended March 31, 2025 was primarily due to a $16.2 million decrease in payroll and payroll related expenses. The decrease in payroll and payroll related expenses primarily consisted of a $13.5 million decrease in stock compensation expense, of which $8.7 million was from the one-time non-cash stock compensation reversal associated with an executive departure. General and administrative expenses as a percentage of sales was 17.0% for the fiscal year ended March 31, 2025, compared to 20.2% for the fiscal year ended March 31, 2024.

Advertising expenses (As Restated)

Advertising expenses, which is net of manufacturer funded advertising, decreased by approximately $6.8 million to $23.8 million for the fiscal year ended March 31, 2025, from $30.6 million for the fiscal year ended March 31, 2024. This decrease for the fiscal year ended March 31, 2025, can be mainly attributed to lower gross media spend and a higher proportion of spending funded by third party partners. As a percentage of sales, advertising expense was 10.5% and 11.2% for the fiscal years ended March 31, 2025, and 2024, respectively.

The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, were $68 for the fiscal year ended March 31, 2025, compared to $67 for the fiscal year ended March 31, 2024, per the new definition of new customers.

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

Depreciation and amortization

Depreciation and amortization expense was approximately $7.0 million and $7.1 million for the fiscal years ended March 31, 2025 and March 31, 2024, respectively.

Other income

Other income decreased by approximately $0.9 million, to $0.9 million for the fiscal year ended March 31, 2025, from $1.9 million for the fiscal year ended March 31, 2024. The decrease was primarily due to lower invested balances. Interest income, net may decrease in the future as we utilize our cash balances on future investments or partnerships, on our operating activities, enter a credit facility or if the current interest rate environment changes.

Provision for income taxes

For the fiscal years ended March 31, 2025 and 2024, we recorded an income tax provision of approximately $5.7 million and $1.2 million, respectively. The increase to the income tax provision for fiscal 2025 is primarily due to the Company establishing a full valuation allowance against its net deferred tax assets. Our effective tax rate for the fiscal year ended March 31, 2025 was approximately (968.3)%, compared to approximately (19.0)% for the fiscal year ended March 31, 2024. The pre-tax loss in fiscal 2024 caused unfavorable items to decrease the rate instead of increasing it. The primary drivers of the rate are related to the increase in valuation allowance against the Company's net deferred tax assets, partially offset with the non-deductible executive compensation under Sec. 162(m) of the Internal Revenue Code. This limits deductions for compensation of covered executives to $1.0 million per individual.

Net loss

Net loss decreased by approximately $1.2 million, to a loss of approximately $6.3 million for the fiscal year ended March 31, 2025, from a loss of approximately $7.5 million for the fiscal year ended March 31, 2024. The decrease to net loss was primarily related to a decrease in general and administrative expenses, including the above-mentioned $8.7 million non-cash stock compensation reversal and advertising expenses, partially offset by a decrease in sales and gross profit, and an increase in the provision for income taxes during the fiscal year.

Liquidity and Capital Resources

At March 31, 2025, we had $54.7 million in cash and cash equivalents and no debt obligations. Our working capital at March 31, 2025 and 2024 was approximately $16.1 million and approximately $21.5 million, respectively. The $5.4 million decrease in working capital was attributable to $14.8 million decrease in current assets, out of which $12.4 million from inventory and $9.4 million decrease in current liabilities, out of which $9.5 million from accounts payable and accrued expenses.

Net cash provided by operating activities remained essentially unchanged at $4.7 million and $4.3 million for the fiscal years ended March 31, 2025 and 2024, respectively. The $0.4 million increase in cash provided by operating activities is due to the $1.2 million decrease in net loss reduced by $7.3 million of non-cash operating adjustments and partially offset by the $6.5 million increase in current liabilities net of current assets excluding cash.

Net cash used in investing activities was $5.1 million and $40.7 million for the fiscal years ended March 31, 2025 and 2024, respectively. This change in investing activities reflects the PetCareRx acquisition in the prior year.

Net cash used in financing activities was $0.2 million and $12.4 million for the fiscal years ended March 31, 2025 and 2024, respectively, due to the payment of an aggregate $0.60 per share dividend in fiscal year 2024.

We paid cash dividends quarterly from August 2009 to August 2023. On February 1, 2024, our Board of Directors elected to suspend the quarterly dividend indefinitely. This move is intended to focus use of the Company’s cash flow on growth initiatives and other higher return initiatives. The Board of Directors reviews and discusses the capital allocation needs of the Company, at a minimum, on a quarterly basis. The declaration and payment of future dividends is discretionary and will be subject to a determination by the Board of Directors. When considering whether to declare a dividend, our Board of Directors will take into account:

• General economic and business conditions;

• Our financial condition and operating results;

• Our available cash and current and anticipated cash needs;

• Our capital requirements;

• Strategic uses of cash for growth initiatives;

• Contractual, legal, tax and regulatory restrictions on the payment of dividends by us; and

• Such other factors as our Board of Directors may deem relevant.

On April 3, 2023, we closed on our acquisition of PetCareRx for aggregate cash consideration of approximately $36.0 million. At March 31, 2025 we had no material outstanding purchase or lease commitments. Other than the lease commitments assumed as part of the PetCareRx acquisition for the leases on two buildings, we are not currently bound by any long- or short-term agreements for the purchase or lease of property and equipment. Any material amounts expended for property and equipment would be the result of an increase in the capacity needed to adequately provide for any future increase in our business. To date we have paid for any needed additions to our capital equipment infrastructure from working capital funds and anticipate this being the case in the future. Our primary source of working capital is cash from operations. We presently have no need for alternative sources of working capital and have no commitments.

Recent Accounting Pronouncements

Other than disclosures included in Note 1 of the Consolidated Financial Statements, which are incorporated by reference as if fully set forth herein, we do not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, will have a material effect on our consolidated financial position, results of operations, or cash flows.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk generally represents the risk that losses may occur in the value of financial instruments as a result of movements in interest rates, foreign currency exchange rates, and commodity prices. Our financial instruments include cash and cash equivalents, accounts receivable, and accounts payable. The book values of cash equivalents, accounts receivable, and accounts payable are considered to be representative of fair value because of the short maturity of these instruments. Interest rates affect our return on excess cash and cash equivalents. At March 31, 2025, we had $54.7 million in cash and cash equivalents, and the majority of our cash and cash equivalents 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 cash equivalents. It would also impact the market value of our cash and cash equivalents. Our cash and cash equivalents are subject to market risk, primarily interest rate and credit risk. Our cash and cash equivalents 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 maintaining cash in federally-insured bank deposit accounts and restricting cash equivalents to highly-liquid investments with a maturities of three months or less. We do not hold any derivative financial instruments that could expose us to significant market risk. At March 31, 2025, we had no debt obligations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

PETMED EXPRESS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID:49)			41

Consolidated Balance Sheets as of March 31, 2025 and 2024			43

Consolidated Statements of Operations for each of the three years in the period ended March 31, 2025			44

Consolidated Statements of Changes in Shareholders’ Equity for each of the three years in the period ended March 31, 2025			45

Consolidated Statements of Cash Flows for each of the three years in the period ended March 31, 2025			46

Notes to Consolidated Financial Statements			47

Report of Independent Registered Public Accounting Firm			82

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of PetMed Express, Inc. and its subsidiaries (the Company) as of March 31, 2025 and 2024, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2025, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Our report dated October 14, 2025 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Restatement of Previously Issued Information

As discussed in Note 1 to the consolidated financial statements, the 2024 and 2023 consolidated financial statements have been restated to correct a misstatement.

Basis for Opinion

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

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition

As reported on the consolidated statements of operations, the Company reported net sales of $227.0 million for the year ended March 31, 2025. As disclosed in Note 3 to the consolidated financial statements, the Company recognizes revenues when control transfers to the customer at the point in time at which the shipment of the product occurs. A portion of the Company’s revenues are initiated based on the AutoShip program where customers are able to request future deliveries without the need to place an order each time.

We identified the proper year-end cutoff of AutoShip revenue transactions as a critical audit matter due to the significant audit effort required in performing procedures and evaluating the audit evidence related to the AutoShip revenue transactions. As disclosed by the Company, material weaknesses were identified in information technology general controls (ITGCs) and its control environment which impacted these revenue transactions.

Our audit procedures related to the cutoff of AutoShip revenue transactions included the following, among others:

•Tested the occurrence of recorded AutoShip revenue transactions on a sample basis by obtaining and inspecting invoices, customer order history, delivery documents, and cash receipts from customers.

•Tested the cutoff of recorded AutoShip revenue transactions on a sample basis by obtaining and inspecting invoices, customer order history, delivery documents, and cash receipts from customers for a period leading up and immediately after quarter-ends.

•Obtained merchant statements for the fiscal year and performed a proof of cash reconciliation from these statements to related total revenue. Also obtained merchant statements from after year-end to inspect for unusual charge-back and return activity.

•Performed a proof of cash reconciliation that reconciled cash deposits to revenue and related revenue accounts.

•Performed analytical procedures to compare monthly revenue trends and usual changes on a month-to-month basis.

Deferred Tax Asset Valuation Allowance

As described in Note 2 and 10 to the consolidated financial statements the Company has a valuation allowance against the Company’s net deferred tax assets. The valuation allowance was 7.4 million as of March 31, 2025. The Company recognizes deferred tax assets and liabilities for the expected future income tax consequences of events that have been recognized in the Company’s financial statements. Valuation allowances are provided for deferred tax assets where it is considered more likely than not that the Company will not realize the benefit of such assets. In evaluating the realizability of deferred tax assets in future periods, the available positive and negative evidence, including history of book losses, recent results of operations and sources of taxable income, including the reversal of deferred tax liabilities, projected future taxable income (exclusive of reversing temporary differences) and tax planning strategies, are considered.

We identified management’s determination of the value of deferred tax assets as a critical audit matter as there is significant judgment required by management to conclude whether it is more likely than not that these deferred tax assets will be realized in future periods. In addition, the auditing of these elements involved complex and subjective auditor judgment, including the need to involve personnel with specialized skill and knowledge.

Our audit procedures to evaluate management’s determination that sufficient taxable income will not be generated to realize all of the deferred tax assets included the following, among others:

•We evaluated the reasonableness of management’s estimates in regard to the ability to utilize deferred tax assets by testing management’s assessment of the timing of future reversals of temporary differences.

•We utilized personnel with specialized knowledge and skill in income taxes and accounting for income taxes under Accounting Standards Codification (ASC) 740, Income Taxes, to assist in the evaluation of management’s assessment of positive and negative evidence and their conclusion that it is more likely than not that the Company will not realize the benefit of its deferred tax assets.

/s/ RSM US LLP

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

Coral Gables, Florida

October 14, 2025

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (in thousands, except for share and per share amounts)


	March 31, 2025		March 31, 2024
ASSETS

Current assets:
Cash and cash equivalents	$	54,720	$	55,296
Accounts receivable, less allowance for credit losses of $91 and $273, respectively	2,317		3,283
Inventories, net	16,205		28,556
Prepaid expenses and other current assets	5,330		6,325
Prepaid income taxes	299		188

Total current assets	78,871		93,648

Noncurrent assets:
Property and equipment, net	28,859		26,657
Intangible and other assets, net	13,346		16,503
Goodwill	26,658		26,658
Operating lease right-of-use assets, net	966		1,432
Deferred tax assets, net	—		4,986
Total noncurrent assets	69,829		76,236

Total assets	$	148,700	$	169,884

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	23,564	$	37,024
Sales tax payable	24,867		25,012
Accrued expenses and other current liabilities	11,711		7,060
Current operating lease liabilities	461		459
Deferred revenue	2,085		2,603
Income taxes payable	80		—
Total current liabilities	62,768		72,158

Deferred tax liabilities, net	263		—
Long-term operating lease liabilities	535		995


Total liabilities	$	63,566	$	73,153

Commitments and contingencies (Note 15)

Shareholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized:
Convertible Preferred stock, $0.001 par value, with a liquidation preference of $4 per share, 250,000 shares authorized ; 2,500 and 2,500 convertible shares issued and outstanding, respectively	9		9
Series A Junior Participating Preferred Stock, $0.001 par value, 100,000 shares authorized; no shares issued or outstanding	—		—
Common stock, $.001 par value, 40,000,000 shares authorized; 20,656,822 and 21,148,692 shares issued and outstanding, respectively	21		21
Additional paid-in capital	18,560		25,146
Retained earnings	66,544		71,555

Total shareholders' equity	85,134		96,731

Total liabilities and shareholders' equity	$	148,700	$	169,884

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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


	Year Ended March 31,
	2025		2024 As Restated		2023 As Restated

Net sales	$	226,972	$	274,095	$	247,569
Cost of sales	157,835		189,327		171,068

Gross profit	69,137		84,768		76,501

Operating expenses:
General and administrative	38,647		55,246		41,714
Advertising	23,781		30,628		25,190
Depreciation and amortization	7,039		7,056		3,546
Impairment loss	1,200		—		—
Total operating expenses	70,667		92,930		70,450

(Loss) income from operations	(1,530)		(8,162)		6,051

Other income:
Interest income, net	185		511		450
Other, net	758		1,378		944
Total other income	943		1,889		1,394

(Loss) income before provision for income taxes	(587)		(6,273)		7,445

Provision for income taxes	5,684		1,191		2,305

Net (loss) income	$	(6,271)	$	(7,464)	$	5,140

Net (loss) income per common share:
Basic	$	(0.30)	$	(0.37)	$	0.25
Diluted	$	(0.30)	$	(0.37)	$	0.25

Weighted average number of common shares outstanding:
Basic	20,596,022		20,395,959		20,274,786
Diluted	20,596,022		20,395,959		20,339,002

Cash dividends declared per common share	$	—	$	0.60	$	1.20

See accompanying notes to consolidated financial statements.

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Years ended March 31, 2023, March 31, 2024, and March 31, 2025

(In thousands)


	Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Retained Earnings		Total
	Shares	Amounts		Shares	Amounts

Balance, March 31, 2022	3	$	9	20,979	$	21	$	11,660	$	111,760	$	123,450

Issuance of restricted stock, net	–	–		105	–		–		–		–

Share based compensation	–	–		–	–		6,617		–		6,617

Dividends declared	–	–		–	–		–		(25,241)		(25,241)

Net income	–	–		–	–		–		5,140		5,140

Balance, March 31, 2023	3	9		21,084	21		18,277		91,659		109,966

Issuance of restricted stock, net	–	–		64	–		–		–		–

Share based compensation	–	–		–	–		6,869		–		6,869

Dividends declared	–	–		–	–		–		(12,640)		(12,640)

Net loss	–	–		–	–		–		(7,464)		(7,464)

Balance, March 31, 2024	3	9		21,148	21		25,146		71,555		96,731

Cancellation of restricted stock, net	–	–		(561)	–		–		–		–

Share based compensation	–	–		–	–		(6,586)		–		(6,586)

Dividends forfeited	–	–		–	–		–		1,260		1,260

Net loss	–	–		–	–		–		(6,271)		(6,271)

Balance, March 31, 2025	3	$	9	20,587	$	21	$	18,560	$	66,544	$	85,134

See accompanying notes to consolidated financial statements.

PETMED EXPRESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)


	Year Ended March 31,
	2025		2024		2023
Cash flows from operating activities:
Net (loss) income	$	(6,271)	$	(7,464)	$	5,140
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	7,039		7,056		3,546
Impairment loss	1,200		—		—
Share based compensation, net	(6,586)		6,869		6,617
Deferred income taxes	5,249		292		(1,630)
Bad debt expense	365		324		214
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable	601		(1,742)		(41)
Inventories	12,351		(6,417)		13,432
Prepaid income taxes	(111)		675		(182)
Prepaid expenses and other current assets	995		(185)		147
Operating lease right-of-use assets, net	466		788		—
Accounts payable	(13,460)		6,102		(2,292)
Sales tax payable	(145)		(1,101)		1,956
Accrued expenses and other current liabilities	3,921		276		896
Operating lease liabilities	(458)		(766)		—
Deferred revenue	(518)		(390)		—
Income taxes payable	80		—		—
Net cash provided by operating activities	4,718		4,317		27,803

Cash flows from investing activities:
Purchase of minority interest investment in Vetster	—		(300)		(5,000)
Acquisition of PetCareRx, net of cash acquired	—		(35,859)		—
Purchases of property and equipment	(5,113)		(4,511)		(5,260)
Net cash used in investing activities	(5,113)		(40,670)		(10,260)

Cash flows from financing activities:
Dividends paid	(181)		(12,437)		(24,537)
Net cash used in financing activities	(181)		(12,437)		(24,537)

Net decrease in cash and cash equivalents	(576)		(48,790)		(6,994)

Cash and cash equivalents, at beginning of fiscal year	55,296		104,086		111,080

Cash and cash equivalents, at end of fiscal year	$	54,720	$	55,296	$	104,086

Supplemental disclosure of cash flow information:

Cash paid for income taxes	$	525	$	130	$	4,312

Dividends payable in accrued expenses	$	26	$	1,466	$	1,262

Non-cash investing activity for property and equipment additions	$	2,170	$	—	$	—

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Restatement of Previously Issued Consolidated Financial Statements

As further described below, (i) our audited consolidated financial statements for the fiscal years ended March 31, 2024 and March 31, 2024, (ii) our unaudited consolidated financial statements covering the quarterly reporting periods during fiscal year 2023, consisting of the quarters ended June 30, 2022, September 30, 2022, December 31, 2022; (iii) our unaudited consolidated financial statements covering the quarterly reporting periods during fiscal year 2024, consisting of June 30, 2023, September 30, 2023, and December 31, 2023 and (iv) our unaudited consolidated financial statements covering the quarterly reporting periods during fiscal year 2025, consisting of the quarters ended June 30, 2024, September 30, 2024, and December 31, 2024 have been restated to reflect the correction of material errors. For restatement information on these interim periods, see Note 18, Quarterly Financial Data (Unaudited and Restated).

Restatement Background

The Company identified certain errors in its accounting for payments, rebates and discounts from suppliers arising from a misapplication of US GAAP. Historically, the Company accounted for (1) certain promotional sales reimbursements as a component of its revenues and (2) certain co-operative advertising expenses as a component of advertising costs that were not specific, incremental or identifiable. The Company notes that these errors should be accounted for as a component of (reduction to) cost of sales. Furthermore, after a thorough review of the Company's vendor agreements, the Company also identified the following additional errors within our accounting for vendor consideration which will also be included in the Restatement:

1)A specific vendor whose marketing and advertising arrangements, previously categorized as cost of sales, needed to be reallocated to offset advertising expenses.

2)A specific vendor whose promotional sales reimbursements, previously categorized as advertising expenses, needed to be reallocated to cost of sales.

Restatement Adjustments

The following table summarizes the effect of the errors on the Company’s consolidated statements of operations for the fiscal years ended March 31, 2024 and March 31, 2023:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Fiscal Year Ended
	March 31, 2024					March 31, 2023
	As Reported		Adjustment	As Restated		As Reported		Adjustment	As Restated
Net sales	$281,064		-$6,969	$274,095		$256,579		-$9,010	$247,569
Cost of sales	$202,416		-$13,089	$189,327		$185,844		-$14,776	$171,068
Gross profit	$78,648		$6,120	$84,768		$70,735		$5,766	$76,501

Advertising	$24,508		$6,120	$30,628		$19,424		$5,766	$25,190
Total operating expenses	$86,810		$6,120	$92,930		$64,684		$5,766	$70,450

Advertising Costs of Acquiring a New Customer	$54			$67		$71			$92
Advertising Costs as a Percentage of Sales	8.7	%		11.2	%	7.6	%		10.2	%

While the restatement affects individual line items on the above statements of operations, there is no impact on net income or other financial statements, including the consolidated balance sheets, statements of cash flows, or statements of changes in shareholders’ equity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Summary of Significant Accounting Policies

Organization

The Company is a leading nationwide direct-to-consumer pet pharmacy and online provider of prescription and non-prescription medications, food, supplements, supplies and vet services for dogs, cats, and horses. The Company markets and sells directly to consumers through its websites, customer contact center, and mobile application. The Company offers consumers an attractive alternative for obtaining pet medications, foods, and supplies in terms of convenience, price, speed of delivery, and valued customer service.

Founded in 1996, the Company's executive headquarters offices are currently located in Delray Beach, Florida. The Company has a March 31 fiscal year and references herein to fiscal 2025, 2024, or 2023 refer to the Company's fiscal years ended March 31, 2025, 2024, and 2023, respectively.

Principles of Consolidation

The Consolidated Financial Statements have been prepared in accordance with U.S. GAAP and include PetMed Express, Inc. and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") Topic 805 ("Business Combinations"). The purchase price is allocated to the fair value of the assets acquired and liabilities assumed. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of the purchase price of acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition.

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions, and competition. In connection with the determination of fair values, the Company may engage a third-party valuation specialist to assist with the valuation of intangible and certain tangible assets acquired and certain obligations assumed. Acquisition-related transaction costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an operating expense in the period in which the costs are incurred.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at March 31, 2025 and 2024 consisted of the Company’s cash accounts and money market accounts with a maturity of three months or less. The carrying amount of cash equivalents approximates fair value. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Use of Estimates

The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company's significant estimates include estimates

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Summary of Significant Accounting Policies

related to collectability of receivables, impairment of inventories, deferred tax allowances, and intangible valuation allowances.

Inventories

Inventories consist of prescription and non-prescription pet medications and pet supplies that are available for sale and are priced at the lower of cost or net realizable value using a weighted average cost method. The Company writes down its inventory for estimated obsolescence. The inventory reserve was approximately $34 thousand and $72 thousand at March 31, 2025 and 2024, respectively.

Property and Equipment

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

Long-lived Assets

Long-lived assets, which include amortizable intangible assets and fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable and are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities (asset group). Recoverability of the asset group is measured by a comparison of the carrying amount of the asset group to the undiscounted cash flows expected to be generated from the asset group. If the sum of the projected undiscounted cash flows (excluding interest charges) of an asset group is less than its carrying value, and the fair value of an asset group is also less than its carrying value, the assets will be written down by the amount by which the carrying value of the asset group exceeded its fair value. At March 31, 2025, the Company concluded that there is no impairment of its long-lived assets under ASC 360.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is not amortized but instead is tested for impairment annually on January 1, or more frequently if events or changes in circumstances indicate goodwill might be impaired. When testing goodwill for impairment by determining whether the carrying value of each reporting unit exceeds its estimated fair value, the Company has the option to choose whether it will apply a qualitative assessment first and then a quantitative assessment, if necessary, or to apply the quantitative assessment directly. The Company has concluded that it has one reporting unit and has assigned the entire balance of goodwill to this reporting unit.

The Company performed its annual goodwill impairment testing as of January 1, 2025 using a quantitative assessment and at that time concluded there was no impairment. Since January 1, 2025, the Company's stock price decreased from $4.82 at December 31, 2024 to $4.19 at March 31, 2025. The Company considered the decrease in its stock price in FY 2025 to be indicative of potential risks that the carrying amount of goodwill may not be recoverable. The Company performed a quantitative assessment as of March 31, 2025, and concluded that goodwill was not impaired because the market capitalization, i.e. fair value determined based on the Company's stock price, (without including a control premium) of the single reporting unit exceeded its carrying value as of March 31, 2025. (See Footnote 19, "Subsequent Events")

Intangible Assets

The Company acquired definite-lived intangible assets in the acquisition (see Note 4) that will be amortized based on their estimated useful lives in accordance with ASC Topic 350 (“Goodwill and Other Intangible Assets”). These definite-lived intangible assets are being amortized over periods ranging from three to seven years. Acquired trade name is not being amortized and is subject to a review for impairment on an annual basis, or more frequently if circumstances indicate an impairment may have occurred. If the carrying amount of an indefinite lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Summary of Significant Accounting Policies

excess. Following the Company's annual impairment testing in fiscal 2025, while there was no single determinative event or factor, the reduction in actual and forecasted revenues related to the trade name led the Company to conclude that it was more likely than not that the fair value of the trade name was less than its book value. As a result of our quantitative impairment test, the Company concluded there was a $1.2 million impairment of the PCRX trade name. The fair value of the trade name was determined using the "relief from royalty" method.

This method estimates the value of the trade name by calculating the present value of the royalty payments that would have been avoided by owning the trade name rather than licensing it. Key assumptions used in this valuation include:

•Royalty Rate: A hypothetical royalty rate of 0.5% was applied, based on comparable market transactions and industry benchmarks for similar trade names. This rate reflects the estimated arm's-length royalty that a market participant would be willing to pay for the use of the trade name.

•Forecasted Revenues: Future revenue projections associated with the use of the trade name were based on the Company's internal forecasts, incorporating expectations for market growth. These forecasts were adjusted to reflect the impact of the identified triggering event.

•Discount Rate: A discount rate of 16.5% was utilized, representing the Company's weighted average cost of capital (WACC) adjusted for the specific risks associated with the trade name and the relevant industry.

•Capitalization Rate: A capitalization growth rate of 13.5% was applied to project cash flows beyond the discrete forecast period, reflecting long-term sustainable growth expectations.

In accordance with ASC 820, Fair Value Measurement, the fair value measurement for the trade name impairment is categorized as a Level 3 fair value measurement. This is due to the significant unobservable inputs used in the relief from royalty valuation, including the royalty rate, forecasted revenues, discount rate, and terminal growth rate, which require significant management judgment and estimation.

Other Assets

Other assets consist of the initial minority interest investment in Vetster. Details can be found in Note 16 below.

Fair Value of Financial Instruments

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

Advertising

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

Cost of Goods Sold

Cost of goods sold includes the purchase price of inventory sold, freight costs associated with inventory, shipping supply costs, inventory shrinkage costs and valuation adjustments and reductions for promotions and discounts offered by the Company's vendors.

Vendor Allowances

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Summary of Significant Accounting Policies

The Company receives funds from its merchandise vendors through a variety of programs and arrangements, primarily in the form of purchases-based or sales-based volumes and for product advertising and placement. The Company recognizes vendor allowances based on purchases and sales as a reduction of cost of sales when the associated inventory is sold. Vendor allowances for advertising and placement are recognized as a reduction of cost of sales ratably over the corresponding performance period. Funds that are determined to be a reimbursement of specific, incremental and identifiable costs incurred to sell vendors’ products are recorded as an offset to the related expense within Advertising Expenses on our Consolidated Statements of Operations when incurred.

Leases

The Company accounts for leases in accordance with ASC Topic 842 ("Leases"). The Company reviews all contracts and determines if the arrangement is or contains a lease, at inception. Operating leases are reported as right-of-use (“ROU”) assets, current lease liabilities and long-term lease liabilities on the Consolidated Balance Sheets. The Company does not have any material leases, individually or in the aggregate, classified as a finance lease.

Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments. The operating lease ROU asset also includes any upfront lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with a term of 12 months or less are not recorded on the balance sheet. The Company’s lease agreements do not contain any residual value guarantees.

Approximately 48% of the Company's Delray Beach property, or approximately 88,000 square feet was leased to two tenants. At March 31, 2025, the leases with these two tenants had a remaining weighted average lease term of 5.2 years. The Company recorded approximately $0.7 million, $1.2 million, and $0.7 million in rental revenue in fiscal 2025, 2024 and 2023, respectively, which was included in other income. In fiscal 2025, the Company recorded $42 thousand of rental revenue associated with a PetCareRx lease which expired in April 2024. The Company expects to receive the following future lease payments, under the current lease agreements, over the next seven years: $0.9 million in fiscal 2026, $1.0 million in fiscal 2027, $1.0 million in fiscal 2028, $0.9 million in fiscal 2029, $1.0 million in fiscal 2030 and $0.4 million in fiscal 2031.

Comprehensive Income

The Company applies ASC Topic 220 (“Reporting Comprehensive Income”) which requires that all items that are recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The items of other comprehensive income that are typically required to be displayed are foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. For the fiscal years ended March 31, 2025, 2024 and 2023, the Company had no components of comprehensive income and therefore does not report comprehensive income or Consolidated Statements of Comprehensive Income.

Income Taxes

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Summary of Significant Accounting Policies

Uncertainty in Income Taxes” guidance, which clarifies ASC Topic 740, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the Consolidated Financial Statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company applies “Accounting for Uncertainty in Income Taxes” guidance to all tax positions for which the statute of limitations remains open. The Company had no liabilities for uncertain tax positions for either fiscal 2025 or fiscal 2024. The Company files tax returns in the U.S. federal jurisdiction and Florida, Arizona, California, Connecticut, Idaho, Maryland, Michigan, Oklahoma, South Carolina, Virginia, Wisconsin, New Jersey, Georgia, Indiana, New York and the District of Columbia. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years ending March 31, 2021, or earlier. Any interest and penalties related to income taxes will be recorded to other income (expenses).

Business Concentrations

The Company purchases its products from a variety of sources, including certain manufacturers, domestic distributors, and wholesalers. We have multiple suppliers for each of our product lines to obtain the lowest cost. There were six and seven suppliers from which we purchased approximately 81% and 78% of all products in fiscal 2025 and 2024, respectively.

Accounting for Share Based Compensation

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

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Update 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". This Update applies to all public entities that are required to report segment information in accordance with Topic 280. The amendments in this Update revise reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this Update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The Update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Update should be applied retrospectively to all prior periods presented in the financial statements. The Company implemented this update in this Form 10-K (see Footnote 4 "Segment Reporting").

In December 2023, the FASB issued Update 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". This Update applies to all entities that are subject to Topic 740. The amendments in this Update revise income tax disclosures primarily related to the rate reconciliation and income taxes paid information as well as the effectiveness of certain other income tax disclosures. The Update is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Update should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the impact of adopting this Update.

In November 2024, the FASB issued ASU No.2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) to require public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, and may be applied on a retrospective or prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting this Update.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Summary of Significant Accounting Policies

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3) Revenue Recognition

In accordance with ASC Topic 606 ("Revenue from Contracts with Customers"), the Company generates revenue by selling prescription and non-prescription pet medication products, pet food, supplements, supplies, membership fees, and veterinary services. Certain pet supplies offered on the Company’s website are drop shipped to customers. The Company considers itself the principal in the arrangement because the Company controls the specified good before it is transferred to the customer. Revenue contracts contain one performance obligation, which is delivery of the product. Customer care and support is deemed not to be a material right to the contract. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are based on historical patterns, however this is not considered a key judgment. Revenue is recognized when control transfers to the customer at the point in time at which the shipment of the product occurs. This key judgment is determined as the shipping point, which represents the point in time when the Company has a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership. Virtually all 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 the accounts receivable balances relative to sales. Revenue is recorded net of sales tax, discounts and return allowances. Return allowances are estimated using historical experience and not material.

Outbound shipping and handling fees are an accounting policy election and are included in sales as the Company considers itself the principal in the arrangement given its responsibility for supplier selection and discretion over pricing. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales.

Membership fees represent the amounts recognized periodically from two membership models. The first is the PetPlus membership for PetCareRx customers, the second is a partner membership provided through PetCareRx. These memberships provide discounted pricing, free standard shipping, veterinary telehealth services and other benefits which represent a single stand-ready performance obligation to provide these benefits. The PetPlus membership fee is an upfront annual charge and automatically renews one year from the initial enrollment date. The Company recognizes the revenue ratably over the term of the PetPlus membership which is generally one year. As shown in the following table, under the PetPlus program, the Company recognized $4.1 million deferred annual membership fees in the twelve months ended March 31, 2025, and had $2.1 million of deferred revenue as of the year ended March 31, 2025.


	( amounts in millions)
Deferred revenue, March 31, 2023	$	—
Deferred revenue acquired with PetCareRx	3.0
Deferred memberships fees received	6.6
Deferred membership fee revenue recognized	(7.0)
Deferred revenue, March 31, 2024	2.6
Deferred Autoship revenue	1.1
Deferred memberships fees received	2.5
Deferred membership fee revenue recognized	(4.1)
Deferred revenue, March 31, 2025	$	2.1

In addition to annual membership fees earned under the PetPlus program, the Company also earns membership fees on a month-to-month basis under its PetCareRx partner membership program. For the twelve months ended March 31, 2025 and March 31, 2024, membership fees earned under the partner program were $3.7 million and $2.8 million, respectively.

The Company has no material contract asset or liability balances at March 31, 2025, March 31, 2024, and April 1, 2023, respectively.

The Company maintains an allowance for credit losses that the Company estimates will arise from customers’ inability to make required payments, arising from either credit card chargebacks or insufficient funds checks. The

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company determines its estimates of the uncollectability of accounts receivable by analyzing historical bad debts and current economic trends in compliance with the provisions of ASC Topic 326 ("Financial Instruments - Credit Losses"). The allowance for credit losses was approximately $91 thousand and $273 thousand at March 31, 2025 and March 31, 2024, respectively.

(4) Segment Reporting

The Company has a single segment that derives sales from customers through the sale of products which are shipped directly to customers. The accounting policies of the Company's single segment are the same as those described in the Company's Significant Accounting Policies.

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM assesses performance for the segment and decides how to allocate resources based on Adjusted EBITDA that is reconciled to GAAP net loss reported on the accompanying Consolidated Statements of Operations below. The CODM uses Adjusted EBITDA to evaluate income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the entity. Adjusted EBITDA is used to monitor budget versus actual results and forecast versus actual results and is utilized when establishing management’s compensation in collaboration with the Board of Directors. Adjusted EBITDA should only be considered as supplemental to, and alongside with, other GAAP based financial performance measures, including various cash flow metrics, net income, net margin, and our other GAAP results.

The table below provides a summary of significant expense categories regularly provided to the CODM reconciled to Adjusted EBITDA, as well as a reconciliation of Adjusted EBITDA to net (loss) income, for the years ended March 31. The CODM does not review segment assets at a different asset level or category than those disclosed within the consolidated balance sheets.


	Twelve Months Ended
($ in thousands)	March 31, 2025		3/31/2024 (As Restated)		3/31/2023 (As Restated)
Net Sales	$	226,972	$	274,095	$	247,569
Significant expense categories:
Cost of sales	157,835		189,327		171,068
Advertising	23,781		30,628		25,190
Other segment expenses (1)	44,684		45,895		31,541
Adjusted EBITDA	$672		$8,245		$19,770

(Add) subtract:
Share-based compensation (reversal) expense	(6,586)		6,870		6,617
Income taxes	5,684		1,191		2,305
Depreciation and amortization	7,039		7,056		3,546
Interest income	(185)		(511)		(450)
Acquisition/Partnership transactions and other items	231		1,679		1,904
Employee severance	738		512		364
Sales tax expense (reversal) (2)	(1,178)		(1,088)		344
Impairment loss	1,200		—		—
Net (loss) income	$	(6,271)	$	(7,464)	$	5,140

(1) Consists of all other expenses on an Adjusted EBITDA basis, including salaries and wages, operating expenses such as utilities, insurance, professional fees, etc.

(2) Reversal consists of abatement of certain sales tax accruals.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5) Acquisition

On April 3, 2023, the Company acquired 100% of the issued and outstanding equity interests of PetCareRx, a New York corporation and a leading supplier of pet food, pet medications, and supplies. The acquisition was completed pursuant to an Agreement and Plan of Merger ("Merger Agreement") by and among the Company, Harry Merger Sub, Inc., a New York corporation and a wholly-owned subsidiary of the Company ("Merger Sub"), PetCareRx and Jeanette Loeb (as representative of the PetCareRx equity holders). The Merger Agreement provided for the Company’s acquisition of PetCareRx pursuant to the merger of Merger Sub with and into PetCareRx, with PetCareRx as the surviving corporation. The aggregate purchase price consideration was $36.1 million and was funded from the Company's cash on hand.

The acquisition of PetCareRx allowed the Company to expand its product catalog, most notably in non-medication products, including food. In addition, PetCareRx brings increased distribution capability and experience, geographic diversity, technology enhancements, additional vendor relationships and a long-tenured and experienced staff.

The Company recognized goodwill of approximately $26.7 million, which is calculated as the excess of the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. Goodwill recognized in the transaction represents synergies or scale achieved by significantly increasing the customer base without adding corresponding levels of additional overhead, the value of additional vendor relationships, including the food manufacturing relationships, a broader product catalog, and an assembled and experienced workforce. These items represent intangible assets that do not qualify for separate recognition. No goodwill is deductible for tax purposes.

The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of April 3, 2023, as calculated by an independent third-party firm. The selected rates of returns were chosen in consideration of the individual risk profiles of the assets, as well as the resulting weighted average return on assets. Intangible assets are considered to be riskier than the overall business, so the Company included a premium to the investment rate of return on the identified intangible discount rates.

The fair values of intangible assets acquired consist of a trade name, customer relationships, and developed technology, which were estimated by applying various discounted cash flow models such as the relief from royalty rate for the trade name, the multi-period excess earnings method for the customer relationships, and the cost to replace method for the developed technology. The fair value measurements were based on significant inputs that are not observable (Level 3). The assumptions made by management in determining the fair value of intangible assets included a discount rate of 12% based on the weighted average cost of capital.

As a result of the acquisition, the Company performed an Internal Revenue Code Section 382 analysis to determine if the net operating losses carried forward would have a utilization limitation. Refer to Note 9 for further discussion.

The table below outlines the purchase price allocation of the purchase for PetCareRx to the acquired identifiable assets, liabilities assumed and goodwill (in thousands):

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Cash and cash equivalents	$	220
Accounts receivable, net	125
Other receivables	506
Inventory	3,116
Other current assets	835
Property and equipment	1,065
Deferred tax assets, net	270
Goodwill	26,657
Intangible assets, net	12,300
Right of use assets	2,220
Other assets	80
Total assets	47,394
Accounts payable	5,713
Accrued liabilities	131
Deferred revenue	2,993
Other current liabilities	258
Operating lease liabilities	2,220
Total liabilities	11,315
Total purchase consideration	$	36,079

The Company incurred a total of $1.7 million in acquisition related costs that were expensed as incurred and recorded in general and administrative expenses in the Company’s Consolidated Statements of Operations, of which $0.5 million was recorded in fiscal year 2023, and $1.2 million was recorded in fiscal year 2024. These costs include banking, legal, accounting, and consulting fees related to the acquisition.

Supplemental Pro Forma Information

The supplemental pro forma financial information presented below is for illustrative purposes only, does not include the pro forma adjustments that would be required under Regulation S-X of the Exchange Act for pro forma financial information, is not necessarily indicative of the financial position or results of operations that would have been realized if the PetCareRx acquisition had been completed on April 1, 2023, does not reflect synergies that might have been achieved, nor is it indicative of future operating results or financial position. The pro forma adjustments are based upon currently available information and certain assumptions that the Company believes are reasonable under the circumstances.

The supplemental pro forma financial information reflects pro forma adjustments to present the combined pro forma results of operations as if the PetCareRx acquisition had occurred on April 1, 2021 to give effect to certain events that the Company believes to be directly attributable to the acquisition. These pro forma adjustments primarily include:

a.A decrease in depreciation expense that would have been recognized due to acquired identifiable fixed assets;

b.A decrease in amortization expense that would have been recognized due to acquired identifiable intangible assets; and

c.A decrease in payroll costs and benefits.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The supplemental pro forma financial information for the prior period twelve months ended March 31, 2023 is as follows (in thousands):


	Twelve Months Ended March 31, 2023
	(unaudited)
Net sales	$	300,230
Net loss	(261)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6) Property and Equipment, Net

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


	March 31,
	2025		2024

Building	$	14,999	$	14,999
Land	3,700		3,700
Building Improvements	4,627		4,511
Computer Software	21,312		14,246
Furniture, fixtures and equipment	9,431		9,329
	54,069		46,785
Less: accumulated depreciation	(25,210)		(20,128)

Property and equipment, net	$	28,859	$	26,657

Depreciation expense was $5.1 million, $5.1 million and $3.5 million for the twelve months ended March 31, 2025, 2024 and 2023, respectively.

The Company evaluated its tangible property and equipment for indicators of impairment as of March 31, 2025 and concluded that no impairment existed.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7: Intangible and Other Assets, Net

Intangible assets and other assets, net consisted of the following (in thousands):


	Useful Life	Gross Value		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Useful Life (Years)
March 31, 2025
Intangible Assets
Toll-free telephone number	Indefinite	$	375	$	—	$	375	Indefinite
Internet domain names	Indefinite	485		$	—	485		Indefinite
Trade Names - PetCareRx	Indefinite	1,400		$	—	1,400		Indefinite
Customer Relationships -PetCareRx	7 years	6,700		(1,914)		4,786		5
Developed Technology - PetCareRx	3 years	3,000		(2,000)		1,000		1
		$	11,960	$	(3,914)	$	8,046
Other Assets
Minority interest investment in Vetster	N/A	5,300		—		5,300		N/A

Balance March 31, 2025		$	17,260	$	(3,914)	$	13,346

March 31, 2024
Intangible Assets
Toll-free telephone number	Indefinite	$	375	$	—	$	375	Indefinite
Internet domain names	Indefinite	485		$	—	485		Indefinite
Trade Names - PetCareRx	Indefinite	2,600				2,600		Indefinite
Customer Relationships -PetCareRx	7 years	6,700		(957)		5,743		6
Developed Technology - PetCareRx	3 years	3,000		(1,000)		2,000		2
Balance March 31, 2024		$	13,160	$	(1,957)	$	11,203

Other Assets
Minority interest investment in Vetster	N/A	$	5,300	$	—	$	5,300	N/A
Balance March 31, 2024		$	18,460	$	(1,957)	$	16,503

The Company evaluated its indefinite-lived intangible assets for indicators of impairment as of March 31, 2025 and concluded that there was an impairment loss of $1.2 million.

Amortization expense for intangible assets was $2.0 million, $2.0 million and zero for the twelve months ended March 31, 2025, 2024 and 2023, respectively. The indefinite life intangibles are not being amortized and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

are subject to an annual review for impairment in accordance with the ASC Topic 350 (“Goodwill and Other Intangible Assets”).

The following table summarizes expected amortization of our intangible assets at March 31, 2025 (in thousands):


Year Ending March 31,
2026	1,958
2027	957
2028	957
2029	957
Thereafter	957
Total	$	5,786

On April 19, 2022, the Company engaged in a three-year partnership agreement with Vetster Inc. (“Vetster”), a Canadian veterinary telehealth company. The Company also purchased a 5% minority interest in Vetster in the amount of $5.0 million and received warrants for additional equity in Vetster, which are tied to future performance milestones. On October 3, 2023, the Company purchased additional shares in Vetster in the amount of $0.3 million. This increased the minority interest investment to $5.3 million. Following this round, the Company’s minority ownership changed to approximately 4.8% of Vetster’s outstanding shares. The minority interest investment is being valued on the cost basis. At March 31, 2025, we evaluated the investment in accordance with ASC Topic 321 (Accounting for Equity Interests) and determined it was not impaired.

Under the terms of the agreement, the Company became the exclusive pet products e-commerce provider for Vetster, and Vetster became the exclusive provider of telehealth and telemedicine services to the Company. The Company and Vetster will continue to work on a non-exclusive basis under the terms of the agreement after April 19, 2025. The minority interest investment is being valued on the cost basis and the investment will be evaluated periodically for any impairment.

Under the terms of the agreement, Vetster earns from 10% to 20% of revenue generated from its customers on orders fulfilled by the Company. For the years ended March 31, 2025, 2024, and 2023 the Company earned approximately $1.5 million, $0.8 million, and $0.4 million in net sales for orders placed through Vetster and incurred fees to Vetster of approximately $0.3 million, $0.2 million, and $0.1 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Accrued Expenses and Other Current Liabilities

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


	March 31,
	2025		2024

Accrued credit card fees	$	286	$	397
Accrued salaries and benefits	1,538		1,530
Accrued merchandise credits / reward program	1,689		1,849
Accrued advertising expenses	2,841		—
Accrued property, plant & equipment	2,170		—
Accrued professional expenses	1,084		222
Accrued sales return allowance	225		318
Accrued dividends payable	26		1,466
Accrued real estate taxes	728		142
Other accrued liabilities	1,124		1,136
Accrued expenses and other current liabilities	$	11,711	$	7,060

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(9) Leases

The Company’s leasing activities primarily consist of real estate leases acquired during the acquisition of PetCareRx for use in the business operations. The leases had initial terms ranging from 5 years to 10 years. Some of the initial lease terms have already matured and the remaining leases have maturity dates ranging from fiscal year 2027 to 2030. The Company assesses whether each lease is an operating lease or a finance lease at the lease commencement date. The Company does not have any material leases, individually or in the aggregate, classified as a finance lease.

Variable Lease Costs

Certain of the Company’s leases require payments for taxes, insurance, and other costs applicable to the property, in addition to the minimum lease payment. These costs are considered variable costs which are based on actual expenses incurred by the lessor. Therefore, these amounts are not included in the calculation of the right-of-use assets and lease liabilities.

The Company has lease agreements which provide for fixed and scheduled escalations, which are included in the calculation of the right-of-use assets and lease liabilities.

Options to Extend or Terminate Leases

The Company’s leases may contain an option to extend the lease term for periods from one to five years The exercise of lease renewal options is at the Company’s sole discretion. If it is reasonably certain that the Company will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of the Company’s right-of-use assets and lease liabilities. The Company’s leases do not generally contain options to early terminate.

Other Lease items

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company's operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the accompanying Consolidated Balance Sheets.

Discount Rate and Lease Term

As of March 31, 2025, the weighted average remaining lease term and discount rate for the Company’s operating leases were 2 years and 3.6%, respectively. As the rate implicit in the lease is generally not readily determinable for the Company’s operating leases, the Company uses its estimated incremental borrowing rate based on the information available at the date of acquisition, April 3, 2023, in determining the present value of future payments.

Lease Costs and Activity

The Company’s lease costs as recorded in the general and administrative costs and activity for the twelve months ended March 31, 2025 and March 31, 2024 are as follows (in thousands):


Lease cost	Twelve months ended March 31, 2025		Twelve months ended March 31, 2024
Operating lease cost - fixed	$	509	$	853
Operating lease costs - variable	53		65
Total lease cost	$	562	$	918

Supplemental cash flow information for the twelve months ended March 31, 2025 are as follows (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


	Twelve months ended March 31, 2025
Cash paid for the amounts included in the measurement of operating lease liabilities	$	501
Right-of-use assets obtained in exchange for operating lease liabilities as a result of acquisition	$	2,220

Maturity of Lease Liabilities

The maturity of the Company’s lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating lease liabilities recognized on the Company’s Consolidated Balance Sheet as of March 31, 2025 were as follows (in thousands):


	March 31, 2025
2026	$	488
2027	502
2028	42
Total lease payments	1,032
Less: Imputed Interest	(36)
Present value of lease liabilities	$	996

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(10) Income Taxes

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


	March 31,
	2025		2024
Deferred tax assets:
Accrued sales tax liability	$	5,101	$	5,126
Other accrued expenses	200		225
Deferred stock compensation	425		680
Deferred revenue	—		31
Bad debt and inventory reserves	227		440
Capitalized research and development costs	3,201		317
Lease liabilities	250		375

Net operating loss carryforward	3,431		3,001
Total deferred tax assets	12,835		10,195

Deferred tax liabilities:
Tax accounting method change	(349)		(541)
Intangible assets	(1,921)		(2,627)
Property and equipment	(3,181)		(1,041)
Right of use assets	(242)		(376)
Total deferred tax liabilities	(5,693)		(4,585)

Valuation allowance	(7,405)		(624)

Total net deferred tax (liability) asset	$	(263)	$	4,986

As of March 31, 2025, the Company had $13.6 million of federal net operating loss carryforwards which begin to expire in fiscal 2026. The Company also had $11.1 million in state net operating loss carryforwards which begin to expire in fiscal 2026. In fiscal 2024 the Company acquired PetCareRx, a loss corporation. The tax attributes acquired are subject to Internal Revenue Code Section 382 which limits the utilization annually. Outlined below are the tax attributes acquired and the balances remaining as of March 31, 2025 and March 31, 2024 (in thousands).

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(10) Income Taxes (Continued)


PetCareRx Tax Attributes Acquired	Total		Sec. 382 limited utilization		Attributes for which a deferred tax asset is recorded		Expiration
Federal net operating losses - limited carryover	$	85,454	$	83,300	$	2,154	Beginning in FY 2024
Federal net operating losses - unlimited carryover	$	10,501	$	—	$	10,501	None
Disallowed business interest expense carryover	$	1,855	$	—	$	1,855	None
State net operating losses	$	11,040	$	2,066	$	8,974	Beginning in FY 2026


Tax Attributes as of March 31, 2024	Total		Sec. 382 limited utilization		Attributes for which a deferred tax asset is recorded		Expiration
Federal net operating losses - limited carryover	$	84,114	$	83,300	$	814	Beginning in FY 2025
Federal net operating losses - unlimited carryover	$	10,501	$	—	$	10,501	None
Disallowed business interest expense carryover	$	—	$	—	$	—	None
State net operating losses	$	11,040	$	2,066	$	8,974	Beginning in FY 2026


Tax Attributes as of March 31, 2025	Total		Sec. 382 limited utilization		Attributes for which a deferred tax asset is recorded		Expiration
Federal net operating losses - limited carryover	$	77,052	$	76,238	$	814	Beginning in FY 2026
Federal net operating losses - unlimited carryover	$	12,739	$	—	$	12,739	None
Disallowed business interest expense carryover	$	—	$	—	$	—	None
State net operating losses	$	11,884	$	832	$	11,052	Beginning in FY 2026

The Company has evaluated the positive and negative evidence bearing upon the realizability of its net deferred tax assets, which are composed primarily of net operating losses and capitalized research and development costs. Management has considered the Company’s cumulative net losses in recent years and limited evidence of sustainable taxable income in future periods, and concluded that it is more likely than not that the Company will not recognize the benefits of deferred tax assets. As a result, a full valuation allowance has been established against the Company’s net deferred tax assets as of March 31, 2025. As of March 31, 2025, the Company recorded a deferred tax liability of $263 thousand, primarily attributable to acquired indefinite-lived intangibles with no corresponding tax basis. For accounting purposes, the intangible assets will not be amortized and subject to impairment review and testing. A portion of these deferred tax liabilities are not available as a source of income to support the realization of deferred tax assets because they are not expected to reverse in the same period as deferred tax assets. As a result, the Company has recorded a deferred tax liability for the portion of the liability that cannot be offset with indefinite lived deferred tax assets. Management reevaluates the positive and negative evidence at each reporting period. The valuation allowance increased by $6.8 million and $0.6

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10) Income Taxes (Continued)

million during the fiscal years ended March 31, 2025 and 2024, respectively. Changes in the valuation allowance were as follows:


	Year Ended March 31,
	2025		2024		2023
Valuation allowance at beginning of year	(624)		—		—
Increases recorded	(6,781)		(624)		—
Valuation allowance at end of year	$	(7,405)	$	(624)	—

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


	Year Ended March 31,
	2025		2024		2023
Current taxes
Federal	$	343	$	490	$	2,622
State	93		408		1,312
Total current income tax provision	436		898		3,934

Deferred income tax provision (benefit)
Federal	4,448		412		(453)
State	800		(119)		(1,176)
Total deferred taxes	5,248		293		(1,629)
Total income tax provision	$	5,684	$	1,191	$	2,305

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


	Year Ended March 31,
	2025		2024		2023
Income taxes at federal statutory rates	$	(123)	$	(1,317)	$	1,563
State income taxes, net of federal tax benefit	(264)		304		107
Non-deductible executive compensation	(1,771)		1,771		—
Other permanent differences	(56)		105		340
Restricted stock shortfall adjustment	373		281		171
Deferred tax adjustments	369		47		—
Taxes payable adjustments	363		—		—
Valuation allowance	6,781		—		—
Other	12		—		124
Total income tax provision	$	5,684	$	1,191	$	2,305

In fiscal 2025 the Company recorded income tax expense of $5.7 million which was primarily related to the increase in the Company's valuation allowance against its net deferred tax assets, partially offset with the benefit related to the cancellation of the former CEO’s performance stock units. In fiscal 2024, the Company recognized non-deductible executive stock compensation of approximately $1.8 million. This included adjusting the deferred tax assets by a cumulative $1.0 million to account for future limitations under Sec. 162(m). This limits deductions for compensation of covered executives to $1.0 million per individual. In fiscal 2023, the Company recognized a

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10) Income Taxes (Continued)

stock compensation shortfall charge of approximately $171 thousand, and recognized a one-time charge of approximately $124 thousand, related to a return to provision true up from the fiscal 2022 income tax provision.

The differences between the effective income tax rate and the statutory U.S. federal income tax rate are as follows:


	Year Ended March 31,
	2025		2024		2023

Federal rate on income before taxes	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	45.0	%	(4.9)	%	1.4	%
Non-deductible executive compensation	301.7	%	(28.2)	%	—	%
Other permanent differences	9.5	%	(1.7)	%	4.6	%
Restricted stock shortfall adjustment	(63.5)	%	(4.4)	%	2.3	%
Deferred tax adjustments	(62.9)	%	(0.8)	%	—	%
Taxes payable adjustments	(61.9)	%	—	%	—	%
Valuation allowance	(1155.2)	%	—	%	—	%
Other	(2.0)	%	—	%	1.7	%
Total effective tax rate	(968.3)	%	(19.0)	%	31.0	%

The Company's effective tax rate of (968.3)% differs from the U.S. statutory rate primarily due to the increase of valuation allowance against its net deferred tax assets, partially offset with the benefit related to the cancellation of the former CEO’s performance stock units during the period ended March 31, 2025.

The pre-tax loss in fiscal 2024 caused unfavorable items to decrease the rate instead of increasing it. The primary driver is related to the non-deductible executive compensation. The primary drivers for the increase in effective tax rate for the fiscal 2023 is due to the recognition of permanent differences related to one-time acquisition costs and a non-deductible portion of restricted stock compensation.

(11) Shareholders’ Equity

Preferred Stock

In April 1998, the Company issued 250,000 shares of its $.001 par value preferred stock at a price of $4.00 per share, less issuance costs of $112 thousand. Each share of the preferred stock is convertible into approximately 4.05 shares of common stock at the election of the shareholder. The shares have a liquidation value of $4.00 per share and may pay dividends at the sole discretion of the Company. The Company does not anticipate paying dividends to the preferred shareholders in the foreseeable future. Each share of preferred stock is entitled to one vote on all matters submitted to a vote of shareholders of the Company. At March 31, 2025 and 2024, 2,500 shares of the convertible preferred stock remained unconverted and outstanding.

On December 2, 2024, the Board of Directors (the “Board”) of the Company adopted a rights agreement and declared a dividend of one right (a “Right”) for each outstanding share of Company common stock, to shareholders of record at the close of business on December 16, 2024 (the “Record Date”). The description and terms of the Rights are set forth in a rights agreement, dated as of December 3, 2024 (the “Rights Agreement”), between the Company and Continental Stock Transfer & Trust Company, a federally chartered trust company, as rights agent.

The Board adopted the Rights Agreement to protect the investment of shareholders during a period in which it believes shares of the Company do not reflect the inherent value of the business or its long-term growth potential, and during which there have been recent significant accumulations of common stock by certain shareholders. The Rights Agreement is intended to enable shareholders to realize the long-term value of their investment in the

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(11) Shareholders’ Equity (Continued)

Company by reducing the likelihood that any entity, person, or group is able to gain a control or control-like position in the Company through open market accumulation without paying all shareholders an appropriate control premium or providing the Board sufficient opportunity to make informed judgments and take actions that are in the best interests of all shareholders.

In general terms, the Rights Agreement imposes significant dilution upon any person or group (other than the Company and certain other excluded persons and exempt persons), that is or becomes the beneficial owner of 12.5% or more of the common stock without the prior approval of the Board following the first public announcement by the Company of the adoption of the Rights Agreement. The term “beneficial ownership” is defined in the Rights Agreement and includes, among other things, certain derivative arrangements.

In general, each Right entitles its registered holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.001 per share (“Preferred Stock”), of the Company at an exercise price of $27.00 per Right, subject to adjustment under certain circumstances (the “Purchase Price”). The Rights will become exercisable if (among other things) any person or group acquires 12.5% or more of the outstanding common stock, including through derivatives agreements, without the approval of the Board (an “Acquiring Person”). If a person or group becomes an Acquiring Person, all holders of Rights except the Acquiring Person or any associate or affiliate thereof may, upon exercise of a Right, purchase for the Purchase Price shares of Common Stock with a market value of two times the Purchase Price, based on the market price of the Common Stock prior to such acquisition. If the Company is acquired in a merger or similar transaction after an Acquiring Person becomes such, all holders of Rights except the Acquiring Person or any associate or affiliate thereof may, upon exercise of a Right, purchase for the Purchase Price shares of the acquiring company with a market value of two times the Purchase Price, based on the market price of the acquiring company’s stock prior to such transaction. Any Rights held by an Acquiring Person will be void and may not be exercised.

The Rights will expire on the earliest to occur of (a) the close of business on December 2, 2025, (b) the time at which the Rights are redeemed by the Company (as provided in the Rights Agreement), or (c) the time at which the Rights are exchanged by the Company (as provided in the Rights Agreement). There was no impact to the Company’s current period financial statements from adopting this Rights Agreement.

In connection with the adoption of the Rights Agreement, the Board adopted Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company (the “Articles of Amendment”), which designates the rights, preferences, and privileges of 100,000 shares of a new series of the Company’s preferred stock, par value $0.001 per share, designated as Series A Junior Participating Preferred Stock. The Company filed the Articles of Amendment with the Secretary of State of the State of Florida on December 3, 2024.

Dividends

The declaration and payment of future dividends is discretionary and will be subject to a determination by the Board of Directors each quarter following its review of the Company’s financial performance. During fiscal 2024, our Board of Directors declared the following dividends:

Declaration Date

Per Share
Dividend

Record Date

Total Amount
(In thousands)

Payment Date

May 22, 2023

$0.30

June 6, 2023

$6,352

June 12, 2023

July 31, 2023

$0.30

August 14, 2023

$6,344

August 18, 2023

(12) Share-Based Compensation

The Company's restricted stock activities consisted of the following:

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(12) Share-Based Compensation (Continued)

•In July 2015, the Company’s 2015 Outside Director Equity Compensation Restricted Stock Plan (“2015 Director Plan”) became effective upon the approval of the plan by the Company’s shareholders. The 2015 Director Plan authorized 400,000 shares of the Company's common stock available for issuance under the plan and provides for an automatic increase every year in the amount of shares available for issuance under the plan of 10% of the shares authorized under the plan.

•In July 2016, the Company’s 2016 Employee Equity Compensation Restricted Stock Plan (“2016 Employee Plan”) became effective upon the approval of the plan by the Company’s shareholders. The 2016 Employee Plan authorized 1,000,000 shares of the Company's Common stock available for issuance under the plan. In July 2022, the Company’s 2022 Employee Equity Compensation Restricted Stock Plan (“2022 Employee Plan”) became effective upon the approval of the plan by the Company’s shareholders.

•The 2022 Employee Plan replaced the 2016 Employee Plan, and as of April 2023 no further awards were granted, or will be granted, under the 2016 Employee Plan. The 2022 Employee Plan authorized 1,000,000 shares of the Company's common stock available for issuance.

•On August 8, 2024, the Company adopted the 2024 Omnibus Plan pursuant to which the Company reserved 850,000 shares of common stock, par value $.001 per share, of the Company’s common stock for the issuance of equity awards granted.

•On September 27, 2024, the Company adopted the 2024 Inducement Plan pursuant to which the Company reserved 350,000 shares of common stock, par value $.001 per share, of the Company’s common stock (subject to the adjustment provisions of the Inducement Plan) for the issuance of equity awards granted under the Inducement Plan.

The Company records compensation expense associated with restricted stock in accordance with ASC Topic 718 (“Share Based Payments”) (ASU 2016-09). The value of the restricted stock is determined based on the market value of the stock at the issuance date. The restriction period or forfeiture period is determined by the Company’s Compensation and Human Capital Committee and is to be no less than 1 year and no more than ten years unless otherwise specified by the Compensation and Human Capital Committee. The following table presents the number of common shares issued under each of the Company's plans:


Plan Name						Common Shares Issued
2016 Employee Plan						423,385
2015 Director Plan						257,567
2022 Employee Plan						682,828
2024 Omnibus Plan						467,794
2024 Inducement Plan						290,000

As of March 31, 2025, all shares in the 2022 Employee Plan, 2016 Employee Plan and 2015 Director Plan were issued subject to a restriction or forfeiture or vesting period that lapses ratably on the first, second, and third anniversaries of the date of grant, and the fair value of which is being amortized over a one to three-year restriction period, with the exception of performance restricted shares which were issued to the Company's former Chief Executive Officer and the former Company's Chief Financial Officer and Company's current Chief Executive Officer.

For the fiscal years ended March 31, 2025, 2024, and 2023, the Company recognized compensation expense related to the 2016 and 2022 Employee Plan, the 2015 Director Plan, 2024 Omnibus Plan and 2024 Inducement Plan of $(6.6) million, $6.9 million, and $6.6 million, respectively. All stock-based compensation expense is recognized as a payroll-related expense and it is included within the general and administrative expenses line item within the Company’s Consolidated Statements of Operations, and the offset is included in the additional paid-in capital line item of the Company’s Consolidated Balance Sheets. See Footnote 10, "Income Taxes" for tax impact of the Company's stock compensation expense.

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(12) Share-Based Compensation (Continued)

Restricted Stock Awards Granted:

In August 2021, the Company issued 90,000 restricted shares and 510,000 performance restricted shares to the Company’s former CEO, in accordance with the former CEO’s employment agreement, under the 2016 Employee Plan. The performance restricted shares were based on achieving absolute stock hurdles within the three-year period from the grant date. If the shares met the absolute stock price hurdle, they would have only been released from restrictions on the third anniversary of the date of grant. As of March 31, 2025, none of the performance stock hurdles were met, and subsequent to March 31, 2024 the performance restricted shares were forfeited and cancelled as a result of the former CEO's cessation of employment with the Company.

In August 2022, the Company issued 13,000 restricted shares and 3,000 performance restricted shares to the Company's former CFO, in accordance with the CFO's employment agreement, under the 2016 Employee Plan. One-third of the restricted shares would have vested on each of the first three anniversaries of the date of grant, subject to the CFO’s continued employment with the Company through the applicable vesting date, with any unvested Restricted Stock Units ("RSUs") being forfeited upon the CFO ceasing to be an employee of the Company. The performance restricted shares were based on the attainment of performance criteria equally weighted between adjusted EBITDA and revenue, and on June 8, 2023 the Company determined that the performance criteria was not attained over the applicable performance period and the performance restricted shares were forfeited.

In June 2023, the Company granted the Company's former CFO 11,750 RSUs under the 2022 Employee Plan, of which 3,750 RSUs were awarded in recognition of the CFO’s contributions during fiscal year 2023 and the remaining 8,000 awarded as a part of the equity award cycle for fiscal year 2024. One-third of the RSUs would have vested on each of the first three anniversaries of the date of grant, subject to the CFO’s continued employment with the Company through the applicable vesting date, with any unvested RSUs being forfeited upon the CFO ceasing to be an employee of the Company. Also in June 2023, the CFO was awarded 8,000 PSUs with a market condition.

In August 2024, 3,917 of the RSUs granted in June 2023 and all PSUs granted in June 2023 were forfeited and cancelled in connection with the former CFO's Transition and Separation Agreement.

On September 27, 2024, the Company’s new CFO received a grant of 250,000 RSUs under the Company’s 2024 Inducement Plan. Such RSUs will vest in one-third increments on each of the first three anniversaries of the date of grant so long as the CFO continues to be employed by the Company on each vesting date, and such RSUs will otherwise contain the standard provisions for RSU grants by the Company.

On January 15, 2025, the Company’s CEO received a grant of 146,772 RSUs and 146,772 PSUs under the Company’s 2024 Omnibus Plan. Such RSUs will vest in one-third increments on each of the first three anniversaries of the date of grant so long as the CEO continues to be employed by the Company on each vesting date, and such RSUs will otherwise contain the standard provisions for RSU grants by the Company. The CEO will earn shares of our common stock pursuant to the PSUs based on the Company’s total shareholder return (“TSR”) relative to the S&P 600 Specialty Retail Index (“Index”) over an overall three-year performance period from January 2, 2025 through December 31, 2027, as follows:

•100% of the target number of shares will be earned if the Company’s TSR is equal to or greater than the 75th percentile of the Index (the “maximum target payout”);

•50% of the target number of shares will be earned if the Company’s TSR is equal to at least the 50th percentile of the Index;

•25% of the target number of shares will be earned if the Company’s TSR is equal to at least the 25th percentile of the Index (the “minimum threshold”);

•No shares will be earned if the TSR is less than the 25th percentile of the Index.

•Linear scaling will be used to determine the number of shares earned for performance between the maximum target payout level and the minimum threshold payout level.

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(12) Share-Based Compensation (Continued)

Restricted Stock Awards

For the year ended March 31, 2025, restricted stock award ("RSA") activity under the Plans was as follows:


	2016 Employee Plan Number of Shares	2015 Director Plan Number of Shares	2022 Employee Plan Number of Shares	All Plans Number of Shares	Weighted Average Grant Date Fair Value
Non-vested restricted stock outstanding at March 31, 2024	605,343	23,707	74,076	703,126	$	19.39
Granted and issued	—	—	—	—	—
Vested	(62,782)	(14,500)	(46,742)	(124,024)	$	22.17
Forfeited	(533,875)	—	(27,334)	(561,209)	$	18.71
Non-vested restricted stock outstanding at March 31, 2025	8,686	9,207	—	17,893	$	21.39

•At March 31, 2025 and 2024, there were 17,893 and 703,126, restricted shares subject to restriction and forfeiture outstanding, respectively.

•During the fiscal years ended March 31, 2025 and 2024, the Company issued, net of forfeitures, (561,209) and 64,390 restricted shares, respectively.

•The weighted-average grant date fair value of restricted shares issued was zero and $14.75 for fiscal years 2025 and 2024, respectively. For the fiscal years ended March 31, 2025, 2024, and 2023, the Company recognized compensation expense (reversal) related to RSAs of $(8.1) million, $6.6 million, and $6.6 million, respectively.

•The total fair market value of restricted shares released from restrictions was $0.5 million and $1.4 million for fiscal years 2025 and 2024, respectively.

•At March 31, 2025 and 2024, there were $0.1 million and $3.2 million of unrecognized compensation costs related to the restricted stock subject to restriction and forfeiture awards, respectively, which is expected to be recognized over the remaining weighted average restriction and forfeiture period of 4.6 months and 7 months for fiscal 2025 and 2024, respectively.

Restricted Stock Units

The Company first granted restricted stock units ("RSUs") in the year ended March 31, 2024. The fair value assigned to RSUs is the market price of the Company’s stock on the grant date. The vesting period for employees and members of the Board of Directors ranges from one to three years.

For the year ended March 31, 2025, RSU activity under the Plans was as follows:

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(12) Share-Based Compensation (Continued)


	2015 Director Plan Number of Shares	2022 Employee Plan Number of Shares	2024 Omnibus Plan Number of Shares	2024 Inducement Plan Number of Shares	Total RSUs	Weighted-Average Grant Date Fair Value Per RSU
Non-vested RSUs outstanding at March 31, 2024	30,000	55,080	—	—	85,080	$	12.75
Granted	2,316	659,942	327,022	290,000	1,279,280	$	4.24
Vested and issued	(10,000)	(57,338)	—	—	(67,338)	$	8.35
Forfeited	—	(89,268)	(6,000)	—	(95,268)	$	5.81
Non-vested RSUs outstanding at March 31, 2025	22,316	568,416	321,022	290,000	1,201,754	$	4.49

•The total grant-date fair value of RSUs granted during the twelve months ended March 31, 2025 and 2024 was $5.4 million and $1.1 million, respectively.

•For the twelve months ended March 31, 2025, 2024 and 2023, the Company recorded stock-based compensation related to RSUs of $1.5 million , $0.3 million and zero, respectively.

•At March 31, 2025 and 2024, there were $4.2 million and $0.8 million of unrecognized compensation costs related to RSUs subject to restriction and forfeiture awards, respectively, which is expected to be recognized over the remaining weighted average restriction and forfeiture period of 2.3 years and 2.3 years for fiscal 2025 and 2024, respectively.

Performance Stock Units

The Company first granted performance stock units ("PSUs") in the year ended March 31, 2024. The fair value assigned to PSUs is determined using the market price of the Company’s stock on the grant date for awards with a performance condition, and by using a Monte Carlo simulation for awards with a market condition. Existing PSUs with a performance condition vest over one year. Existing PSUs with a market condition vest over three years. Stock-based compensation costs associated with PSUs with a performance condition are re-assessed each reporting period based upon the estimated performance attainment on the reporting date until the performance conditions are met. The ultimate number of shares of common stock that are issued to an employee is the result of the actual performance of the Company at the end of the performance period compared to the performance targets and generally ranges from 0% to 200% of the initial PSU grant.

For the year ended March 31, 2025, PSU activity under the Plans was as follows:


	2022 Employee Plan Number of Shares	2024 Omnibus Plan Number of Shares	Total PSUs	Weighted-Average Grant Date Fair Value Per PSU
Non-vested PSUs outstanding at March 31, 2024	12,000	—	12,000	$	10.48
Granted	—	146,772	146,772	$	3.47
Vested and issued	(2,000)	—	(2,000)	$	13.95
Forfeited	(10,000)	—	(10,000)	$	9.79

Non-vested RSUs outstanding at March 31, 2025	—	146,772	146,772	$	3.47

• The total grant-date fair value of PSUs granted during the twelve months ended March 31, 2025 and 2024 was $0.5 million and $0.1 million, respectively.

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(12) Share-Based Compensation (Continued)

•For the twelve months ended March 31, 2025 and 2024, the Company recorded stock-based compensation related to PSUs of $(1) thousand and $64 thousand, respectively.

•At March 31, 2025 and 2024, there were $475 thousand and $62 thousand unrecognized compensation costs related to PSUs subject to restriction and forfeiture awards, respectively, which is expected to be recognized over the remaining weighted average restriction and forfeiture period of 2.8 years and 1.6 years for fiscal 2025 and 2024, respectively.

(13) Fair Value Measurements

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

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

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

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

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. At March 31, 2025 and 2024 the Company had invested the majority of its $54.7 million and $55.3 million cash and cash equivalents balance in money market funds which are classified within Level 1.

(14) Net (Loss) Income Per Share

In accordance with the provisions of ASC Topic 260 (“Earnings Per Share”) basic net (loss) 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 (loss) income per common share includes the dilutive effect of potential restricted stock and the effects of the potential conversion of preferred shares, calculated using

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(14) Net Income Per Share (Continued)

the treasury stock method. Unvested restricted stock, and convertible preferred shares issued by the Company represent the only dilutive effect reflected in diluted weighted average shares outstanding.

The following is a reconciliation of the numerators and denominators of the basic and diluted net (loss) income per share computations for the periods presented (in thousands, except for per share amounts):


	Year Ended March 31,
	2025		2024		2023
Net (loss) income (numerator):

Net (loss) income	$	(6,271)	$	(7,464)	$	5,140

Shares (denominator)

Weighted average number of common shares outstanding used in basic computation	20,596,022		20,395,959		20,274,786
Common shares issuable upon the vesting of restricted stock	—		—		54,091
Common shares issuable upon conversion of preferred shares	—		—		10,125
Shares used in diluted computation	20,596,022		20,395,959		20,339,002

Net (loss) income per common share:

Basic	$	(0.30)	$	(0.37)	$	0.25
Diluted	$	(0.30)	$	(0.37)	$	0.25

At March 31, 2025, 2024, and 2023, 1,027,909, 827,863, and 745,854 shares of common restricted stock, respectively, were excluded from the computations of diluted net income per common share, as their inclusion would have had an anti-dilutive effect on diluted (net loss)/net income per common share.

(15) Commitments and Contingencies

Legal Matters and Routine Proceedings

The Company has settled complaints that had been filed with various states’ pharmacy boards in the past. There can be no assurances made that other states will not attempt to take similar actions against the Company in the future. The Company also intends to vigorously defend 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. From time to time, the Company may be involved in and subject to disputes and legal proceedings, as well as demands, claims and threatened litigation that arise in the ordinary course of its business. These proceedings may include allegations involving business practices, infringement of intellectual property, employment or other matters. The ultimate outcome of any legal proceeding is often uncertain, there can be no assurance that the Company will be successful in any legal proceeding, and unfavorable outcomes could have a negative impact on our results of operations and financial condition. In accordance with ASC Topic 450-20 ("Loss Contingencies"), the Company records a liability in its financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews the status of each significant matter each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the financial statements not misleading. If the loss is not probable and cannot be reasonably estimated, a liability is not recorded in the Company’s financial statements. Gain contingencies are not recorded until they are realized. Legal costs related to any legal matters are expensed as incurred.

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(15) Commitments and Contingencies (Continued)

similarly situated. Plaintiff alleges that the Company violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law by representing “reg.” prices for products which the Company allegedly never charged for those products. On May 13, 2024, the Company removed the matter to the U.S. District Court for the Western District of Pennsylvania in Pittsburgh. The Company successfully opposed the Plaintiff's motion to remand the case back to the Court of Common Pleas. On the face of the Complaint, Plaintiff is seeking damages for himself in the amount of the allegedly illusory discounts he allegedly believed he was receiving when purchasing products from the Company or, in the alternative, a complete refund of amounts he paid to the Company, and he is also seeking a liability determination for members of the proposed class. The Company denies liability in this matter and intends to defend the action accordingly. The Company cannot determine materiality or estimate a range of potential liability, if any, at this time if the Company were determined to be liable.

On February 14, 2025, Plaintiffs Ashley Bird, Tyler Dvornski, and Tiffany Hughes (“Plaintiffs”) filed an action in the Northern District of New York on behalf of themselves and a class of others similarly situated alleging that the Company misreppresented that its products were on sale by showing a “regular” strikethrough price, when the products were never sold for the strikethrough price. Plaintiffs allege that by using this “false reference price” or “false discount,” the Company artificially inflated its prices and charged consumers more than it otherwise could. Plaintiffs allege that these purported practices violate New York General Business Law §§ 349 and 350 as well as California’s Unfair Competition Law and California’s False Advertising Law. After the Company made a motion to dismiss the complaint, Plaintiffs filed an amended complaint. The Company notified the court that it intends to file a motion to dismiss the amended complaint. The Company denies liability in this matter and intends to defend the action accordingly. The Company cannot determine materiality or estimate a range of potential liability, if any, at this time if the Company were determined to be liable.

(16) Employee Benefit Plan

The Company maintains a 401(k) Savings Plan for eligible employees. The plan is a defined contribution plan that is administered by the Company. All regular, full-time employees are eligible for voluntary participation upon completing 90 days of service and having attained the age of 21. The plan provides for growth in savings through contributions and income from investments. It is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. Plan participants are allowed to contribute a specified percentage of their base salary. The Company matches 100% of the first 4% of the employee's contribution. The matching contribution is funded subsequent to the calendar year. During the fiscal years ended March 31, 2025, 2024, and 2023, the Company recorded $309 thousand, $350 thousand, and $289 thousand, respectively, of 401(k) matching contribution and administration expense to general and administrative expenses. In accordance with the plan documents, the Company can elect to make discretionary contributions, however, none were made during the fiscal year ended March 31, 2025.

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(17) Related Party Transaction

On September 29, 2024 the Company entered into a master services agreement with Fabric, Inc ( “Fabric”), a privately-held company. Under this agreement, Fabric will provide cloud-based product services to the Company with a one-year term with auto-renewal unless either party provides notice at least 90 days in advance. Per the terms of the agreement, the Company will pay Fabric $115,000 the first year and $100,000 for each potential year thereafter with potential changes in the amounts paid based on actual usage of Fabric’s services. The Company paid $105 thousand related to this contract in fiscal year 2025 . There was no amount owed by the Company to Fabric as of March 31, 2025. Sandra Campos, Chief Executive Officer and President of the Company, is an equity-holder in Fabric and served on the Board of Directors of Fabric during the twelve months ended March 31, 2025. This transaction was reviewed and approved by the Company’s Audit Committee of the Board of Directors in accordance with the Company’s related party transaction policy.

(18) Quarterly Financial Data (Unaudited and Restated)

The Company is providing restated quarterly and year-to-date unaudited consolidated financial information for interim periods occurring within the years ended March 31, 2024 and March 31, 2023, and the nine-months ended December 31, 2024. See Note 1, Restatement of Previously Issued Consolidated Financial Statements for further background concerning the events preceding the restatement of financial information in this Comprehensive Form 10-K.

The following tables set forth the corrections in each of the individual line items affected in the condensed consolidated statements of income for each respective period:


Three Months Ended
	June 30, 2024					June 30, 2023					June 30, 2022
	As Reported		Adjustment	As Restated		As Reported		Adjustment	As Restated		As Reported		Adjustment	As Restated
Net sales	$67,952		-$1,745	$66,207		$78,244		-$2,333	$75,911		$70,042		-$2,653	$67,389
Cost of sales	$49,981		-$2,811	$47,170		$55,718		-$4,811	$50,907		$50,244		-$3,750	$46,494
Gross profit	$17,971		$1,066	$19,037		$22,526		$2,478	$25,004		$19,798		$1,097	$20,895

Advertising	$6,990		$1,066	$8,056		$7,265		$2,478	$9,743		$6,349		$1,096	$7,445
Total operating expenses	$13,585		$1,066	$14,651		$24,654		$2,478	$27,132		$16,453		$1,096	$17,549

Advertising Costs of Acquiring a New Customer	$58			$67		$53			$71		$91			$107
Advertising Costs as a Percentage of Sales	10.3	%		12.2	%	9.3	%		12.8	%	9.1	%		11.0	%

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Three Months Ended
	September 30, 2024					September 30, 2023					September 30, 2022
	As Reported		Adjustment	As Restated		As Reported		Adjustment	As Restated		As Reported		Adjustment	As Restated
Net sales	$59,570		-$1,526	$58,044		$70,999		-$1,542	$69,457		$65,260		-$2,105	$63,155
Cost of sales	$42,259		-$2,988	$39,271		$50,937		-$2,736	$48,201		$46,943		-$3,916	$43,027
Gross profit	$17,311		$1,462	$18,773		$20,062		$1,194	$21,256		$18,317		$1,811	$20,128

Advertising	$4,606		$1,463	$6,069		$5,512		$1,193	$6,705		$3,879		$1,810	$5,689
Total operating expenses	$16,757		$1,463	$18,220		$19,187		$1,193	$20,380		$15,490		$1,810	$17,300

Advertising Costs of Acquiring a New Customer	$60			$79		$49			$60		$64			$94
Advertising Costs as a Percentage of Sales	7.7	%		10.5	%	7.8	%		9.7	%	5.9	%		9.0	%


Three Months Ended
	December 31, 2024					December 31, 2023					December 31, 2022
	As Reported		Adjustment	As Restated		As Reported		Adjustment	As Restated		As Reported		Adjustment	As Restated
Net sales	$52,984		-$1,023	$51,961		$65,317		-$1,644	$63,673		$58,870		-$1,632	$57,238
Cost of sales	$38,075		-$2,245	$35,830		$47,434		-$3,185	$44,249		$43,632		-$2,966	$40,666
Gross profit	$14,909		$1,222	$16,131		$17,883		$1,541	$19,424		$15,238		$1,334	$16,572

Advertising	$2,987		$1,222	$4,209		$5,762		$1,540	$7,302		$4,641		$1,333	$5,974
Total operating expenses	$15,359		$1,222	$16,581		$20,957		$1,540	$22,497		$16,007		$1,333	$17,340

Advertising Costs of Acquiring a New Customer	$47			$66		$59			$75		$64			$82
Advertising Costs as a Percentage of Sales	5.6	%		8.1	%	8.8	%		11.5	%	7.9	%		10.4	%

Table of Contents


Six Months Ended
	September 30, 2024					September 30, 2023					September 30, 2022
	As Reported		Adjustment	As Restated		As Reported		Adjustment	As Restated		As Reported		Adjustment	As Restated
Net sales	$127,522		-$3,271	$124,251		$149,243		-$3,875	$145,368		$135,302		-$4,758	$130,544
Cost of sales	$92,240		-$5,799	$86,441		$106,655		-$7,547	$99,108		$97,187		-$7,666	$89,521
Gross profit	$35,282		$2,528	$37,810		$42,588		$3,672	$46,260		$38,115		$2,908	$41,023

Advertising	$11,596		$2,529	$14,125		$12,777		$3,671	$16,448		$10,228		$2,906	$13,134
Total operating expenses	$30,342		$2,529	$32,871		$43,841		$3,671	$47,512		$31,943		$2,906	$34,849

Advertising Costs of Acquiring a New Customer	$59			$72		$51			$66		$78			$101
Advertising Costs as a Percentage of Sales	9.1	%		11.4	%	8.6	%		11.3	%	7.6	%		10.1	%


Nine Months Ended
	December 31, 2024			December 31, 2023			December 31, 2022
	As Reported	Adjustment	As Restated	As Reported	Adjustment	As Restated	As Reported	Adjustment	As Restated
Net sales	$180,506	-$4,294	$176,212	$214,560	-$5,519	$209,041	$194,172	-$6,390	$187,782
Cost of sales	$130,315	-$8,044	$122,271	$154,089	-$10,732	$143,357	$140,819	-$10,632	$130,187
Gross profit	$50,191	$3,750	$53,941	$60,471	$5,213	$65,684	$53,353	$4,242	$57,595

Advertising	$14,583	$3,751	$18,334	$18,539	$5,211	$23,750	$14,869	$4,239	$19,108
Total operating expenses	$45,701	$3,751	$49,452	$64,798	$5,211

PETMED EXPRESS INC 10-K