UNITED
STATES
securities
and exchange commission
Washington
D.C. 20549
FORM
10-Q
(Mark
One)
x QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the quarterly period ended September 30, 2015
or
¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition
period from _____________ to _____________
Commission
file number: 000-28827
PETMED
EXPRESS, INC.
(Exact name
of registrant as specified in its charter)
FLORIDA |
65-0680967 |
(State
or other jurisdiction of
incorporation
or organization) |
(I.R.S.
Employer
Identification
No.) |
1441 S.W.
29th Avenue, Pompano Beach, Florida 33069
(Address
of principal executive offices, including zip code)
(954)
979-5995
(Registrant’s
telephone number, including area code)
N/A
(Former name,
former address and former fiscal year, if changed since last report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes x
No ¨
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes
x No ¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
|
Large accelerated filer |
¨ |
Accelerated filer |
x |
|
|
Non-accelerated filer |
¨ |
Smaller reporting company |
¨ |
|
|
(Do not check if smaller
reporting company) |
|
|
|
Indicate by check mark whether the registrant
is a shell company (defined in Rule 12b-2 of the Exchange Act).
Yes
¨ No x
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 20,330,842
Common Shares, $.001 par value per share at October 27, 2015.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
PETMED
EXPRESS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In thousands,
except for per share amounts)
| |
September 30, | | |
March 31, | |
| |
2015 | | |
2015 | |
| |
(Unaudited) | | |
| |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 42,180 | | |
$ | 35,613 | |
Short term investments - available for sale | |
| 15,604 | | |
| 15,591 | |
Accounts receivable, less allowance for doubtful accounts
of $12 and $8, respectively | |
| 1,624 | | |
| 1,931 | |
Inventories - finished goods | |
| 24,404 | | |
| 25,068 | |
Prepaid expenses and other current assets | |
| 1,466 | | |
| 1,380 | |
Deferred tax assets | |
| 761 | | |
| 817 | |
Prepaid income taxes | |
| 60 | | |
| - | |
Total current assets | |
| 86,099 | | |
| 80,400 | |
| |
| | | |
| | |
Noncurrent assets: | |
| | | |
| | |
Property and equipment, net | |
| 1,367 | | |
| 1,569 | |
Intangible assets | |
| 860 | | |
| 860 | |
Deferred tax assets | |
| 74 | | |
| 23 | |
| |
| | | |
| | |
Total assets | |
$ | 88,400 | | |
$ | 82,852 | |
| |
| | | |
| | |
LIABILITIES
AND SHAREHOLDERS' EQUITY | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 7,277 | | |
$ | 5,153 | |
Accrued expenses and other current liabilities | |
| 1,879 | | |
| 2,214 | |
Income taxes payable | |
| - | | |
| 50 | |
| |
| | | |
| | |
Total liabilities | |
| 9,156 | | |
| 7,417 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Shareholders' equity: | |
| | | |
| | |
Preferred stock, $.001 par value, 5,000 shares authorized;
3 convertible shares issued and outstanding with a liquidation preference of $4 per share | |
| 9 | | |
| 9 | |
Common stock, $.001 par value, 40,000 shares authorized;
20,331 and 20,262 shares issued and outstanding, respectively | |
| 20 | | |
| 20 | |
Additional paid-in capital | |
| 3,987 | | |
| 3,117 | |
Retained earnings | |
| 75,301 | | |
| 72,343 | |
Accumulated other comprehensive
loss | |
| (73 | ) | |
| (54 | ) |
| |
| | | |
| | |
Total shareholders' equity | |
| 79,244 | | |
| 75,435 | |
| |
| | | |
| | |
Total liabilities and shareholders'
equity | |
$ | 88,400 | | |
$ | 82,852 | |
See accompanying notes to condensed
consolidated financial statements.
PETMED
EXPRESS, INC. AND SUBSIDIARIES
condensed
consolidated statementS of COMPREHENSIVE INCOME
(In thousands,
except for per share amounts)(Unaudited)
| |
Three Months Ended | | |
Six Months Ended | |
| |
September 30, | | |
September 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Sales | |
$ | 56,725 | | |
$ | 57,576 | | |
$ | 128,359 | | |
$ | 130,117 | |
Cost of sales | |
| 37,812 | | |
| 39,117 | | |
| 86,480 | | |
| 87,886 | |
| |
| | | |
| | | |
| | | |
| | |
Gross profit | |
| 18,913 | | |
| 18,459 | | |
| 41,879 | | |
| 42,231 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
General and administrative | |
| 5,388 | | |
| 5,381 | | |
| 11,187 | | |
| 11,256 | |
Advertising | |
| 6,249 | | |
| 6,915 | | |
| 14,134 | | |
| 16,811 | |
Discontinued project costs | |
| - | | |
| 1,714 | | |
| - | | |
| 1,714 | |
Depreciation | |
| 186 | | |
| 159 | | |
| 377 | | |
| 322 | |
Total operating expenses | |
| 11,823 | | |
| 14,169 | | |
| 25,698 | | |
| 30,103 | |
| |
| | | |
| | | |
| | | |
| | |
Income from operations | |
| 7,090 | | |
| 4,290 | | |
| 16,181 | | |
| 12,128 | |
| |
| | | |
| | | |
| | | |
| | |
Other income: | |
| | | |
| | | |
| | | |
| | |
Interest income, net | |
| 55 | | |
| 44 | | |
| 105 | | |
| 88 | |
Other, net | |
| (4 | ) | |
| (2 | ) | |
| (8 | ) | |
| 7 | |
Total other income | |
| 51 | | |
| 42 | | |
| 97 | | |
| 95 | |
| |
| | | |
| | | |
| | | |
| | |
Income before provision for income taxes | |
| 7,141 | | |
| 4,332 | | |
| 16,278 | | |
| 12,223 | |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes | |
| 2,639 | | |
| 1,600 | | |
| 6,019 | | |
| 4,518 | |
| |
| | | |
| | | |
| | | |
| | |
Net income | |
$ | 4,502 | | |
$ | 2,732 | | |
$ | 10,259 | | |
$ | 7,705 | |
| |
| | | |
| | | |
| | | |
| | |
Net change in unrealized gain (loss) on short term
investments | |
| 16 | | |
| (1 | ) | |
| (19 | ) | |
| 7 | |
| |
| | | |
| | | |
| | | |
| | |
Comprehensive income | |
$ | 4,518 | | |
$ | 2,731 | | |
$ | 10,240 | | |
$ | 7,712 | |
| |
| | | |
| | | |
| | | |
| | |
Net income per common share: | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.22 | | |
$ | 0.14 | | |
$ | 0.51 | | |
$ | 0.39 | |
Diluted | |
$ | 0.22 | | |
$ | 0.14 | | |
$ | 0.51 | | |
$ | 0.38 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of common shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 20,126 | | |
| 20,016 | | |
| 20,100 | | |
| 19,988 | |
Diluted | |
| 20,246 | | |
| 20,146 | | |
| 20,222 | | |
| 20,119 | |
| |
| | | |
| | | |
| | | |
| | |
Cash dividends declared per common
share | |
$ | 0.18 | | |
$ | 0.17 | | |
$ | 0.36 | | |
$ | 0.34 | |
See accompanying notes to condensed
consolidated financial statements.
PETMED
EXPRESS, INC. AND SUBSIDIARIES
condensed
consolidated statementS of cash flows
(In thousands)(Unaudited)
| |
Six Months Ended | |
| |
September 30, | |
| |
2015 | | |
2014 | |
Cash flows from operating activities: | |
| | | |
| | |
Net income | |
$ | 10,259 | | |
$ | 7,705 | |
Adjustments to reconcile net income to net cash provided
by operating activities: | |
| | | |
| | |
Depreciation | |
| 377 | | |
| 322 | |
Share based compensation | |
| 777 | | |
| 753 | |
Discontinued project costs | |
| - | | |
| 1,714 | |
Deferred income taxes | |
| 4 | | |
| 237 | |
Bad debt expense | |
| 227 | | |
| 40 | |
(Increase) decrease in operating assets and increase
(decrease) in liabilities: | |
| | | |
| | |
Accounts receivable | |
| 81 | | |
| (235 | ) |
Inventories - finished goods | |
| 664 | | |
| 15,192 | |
Prepaid income taxes | |
| (60 | ) | |
| (1,816 | ) |
Prepaid expenses and other current assets | |
| (86 | ) | |
| 119 | |
Accounts payable | |
| 2,125 | | |
| (521 | ) |
Income taxes payable | |
| (50 | ) | |
| - | |
Accrued expenses and other current
liabilities | |
| (277 | ) | |
| 80 | |
Net cash provided by operating
activities | |
| 14,041 | | |
| 23,590 | |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Net change in investments | |
| (33 | ) | |
| (37 | ) |
Purchases of property and equipment | |
| (175 | ) | |
| (372 | ) |
Net cash used in investing activities | |
| (208 | ) | |
| (409 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Dividends paid | |
| (7,358 | ) | |
| (6,946 | ) |
Tax adjustment related to restricted
stock | |
| 92 | | |
| 39 | |
Net cash used in financing activities | |
| (7,266 | ) | |
| (6,907 | ) |
| |
| | | |
| | |
Net increase in cash and cash equivalents | |
| 6,567 | | |
| 16,274 | |
Cash and cash equivalents, at
beginning of period | |
| 35,613 | | |
| 18,305 | |
| |
| | | |
| | |
Cash and cash equivalents, at
end of period | |
$ | 42,180 | | |
$ | 34,579 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
| |
| | | |
| | |
Cash paid for income taxes | |
$ | 6,033 | | |
$ | 6,058 | |
| |
| | | |
| | |
Dividends payable in accrued
expenses | |
$ | 154 | | |
$ | 191 | |
See accompanying notes to condensed
consolidated financial statements.
PETMED
EXPRESS, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Summary of Significant
Accounting Policies
Organization
PetMed Express, Inc.
and subsidiaries, d/b/a 1-800-PetMeds (the “Company”), is a leading nationwide pet pharmacy. The Company markets prescription
and non-prescription pet medications, health products, and supplies for dogs and cats, direct to the consumer. The Company offers
consumers an attractive alternative for obtaining pet medications in terms of convenience, price, and speed of delivery. The Company
markets its products through national television, online, and direct mail/print advertising campaigns, which aim to increase the
recognition of the “1-800-PetMeds” brand name, and “PetMeds” family of trademarks, increase traffic on
its website at www.1800petmeds.com, acquire new customers, and maximize repeat purchases. The majority of the Company’s
sales are to residents in the United States. The Company’s executive offices are located in Pompano Beach, Florida. The
Company’s fiscal year end is March 31, and references herein to Fiscal 2016 or Fiscal 2015 refer to the Company's fiscal
years ending March 31, 2016 and 2015, respectively.
Basis of Presentation and Consolidation
The
accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form
10-Q and, therefore, do not include all of the information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the opinion of management, the accompanying Condensed Consolidated
Financial Statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial
position of the Company at September 30, 2015, the Statements of Comprehensive Income for the three and six months ended September
30, 2015 and 2014, and Cash Flows for the six months ended September 30, 2015 and 2014. The results of operations for the three
and six months ended September 30, 2015 are not necessarily indicative of the operating results expected for the fiscal year ending
March 31, 2016. These financial statements should be read in conjunction with the financial statements and notes thereto contained
in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2015. The Condensed Consolidated Financial
Statements include the accounts of PetMed Express, Inc. and its wholly owned subsidiaries. All significant intercompany transactions
have been eliminated upon consolidation.
Use of Estimates
The preparation of Condensed
Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The carrying amounts
of the Company's cash and cash equivalents, short term investments, accounts receivable, and accounts payable approximate fair
value due to the short-term nature of these instruments.
Recent Accounting Pronouncements
The Company does not
believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, will have a material
effect on the Company’s consolidated financial position, results of operations, or cash flows.
Note
2: Net Income Per Share
In accordance with the
provisions of ASC Topic 260 (“Earnings Per Share”) basic net income per share is computed by dividing net income
available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income
per common share includes the dilutive effect of potential restricted stock and the effects of the potential conversion of preferred
shares, calculated using the treasury stock method. Unvested restricted stock and convertible preferred shares issued by the Company
represent the only dilutive effect reflected in the diluted weighted average shares outstanding.
The following is a reconciliation
of the numerators and denominators of the basic and diluted net income per share computations for the periods presented (in thousands,
except for per share amounts):
| |
Three Months Ended September 30, | | |
Six Months Ended September 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Net income (numerator): | |
| | | |
| | | |
| | | |
| | |
Net income | |
$ | 4,502 | | |
$ | 2,732 | | |
$ | 10,259 | | |
$ | 7,705 | |
Shares (denominator): | |
| | | |
| | | |
| | | |
| | |
Weighted average number of common shares outstanding
used in basic computation | |
| 20,126 | | |
| 20,016 | | |
| 20,100 | | |
| 19,988 | |
Common shares issuable upon vesting of restricted
stock | |
| 110 | | |
| 120 | | |
| 112 | | |
| 121 | |
Common shares issuable upon conversion
of preferred shares | |
| 10 | | |
| 10 | | |
| 10 | | |
| 10 | |
Shares used in diluted computation | |
| 20,246 | | |
| 20,146 | | |
| 20,222 | | |
| 20,119 | |
Net income per common share: | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.22 | | |
$ | 0.14 | | |
$ | 0.51 | | |
$ | 0.39 | |
Diluted | |
$ | 0.22 | | |
$ | 0.14 | | |
$ | 0.51 | | |
$ | 0.38 | |
At September 30, 2015 and 2014, all common
restricted stock were included in the diluted net income per common share computation.
Note 3: Accounting for Stock-Based Compensation
The Company records
compensation expense associated with restricted stock in accordance with ASC Topic 718 (“Share Based Payment”).
The compensation expense related to all of the Company’s stock-based compensation arrangements is recorded as a component
of general and administrative expenses.
The Company had 812,196
restricted common shares issued under the 2006 Employee Equity Compensation Restricted Stock Plan (“Employee Plan”)
and 272,000 restricted common shares issued under the 2006 Outside Director Equity Compensation Restricted Stock Plan (“Director
Plan”) at September 30, 2015, all shares of which were issued subject to a restriction or forfeiture period which lapse
ratably on the first, second, and third anniversaries of the date of grant, and the fair value of which is being amortized over
the three-year restriction period. In July 2015 the Board of Directors approved the issuance of 77,500 restricted shares to certain
employees and the outside directors of the Company, with a fair value of $17.02 per share. For the quarters ended September 30,
2015 and 2014, the Company recognized $406,000 and $380,000, respectively, of compensation expense related to the Employee and
Director Plans. For the six months ended September 30, 2015 and 2014, the Company recognized $777,000 and $753,000, respectively,
of compensation expense related to the Employee and Director Plans. At September 30, 2015 and 2014, there was $2.4 million and
$2.8 million of unrecognized compensation cost related to the non-vested restricted stock awards, respectively, which is expected
to be recognized over the next three years. At September 30, 2015 and 2014, there were 186,000 and 231,000 non-vested restricted
shares, respectively.
On July 24, 2015, the
Company’s 2015 Outside Director Equity Compensation Restricted Stock Plan (“2015 Director Plan) became effective upon
the approval of the plan by the Company’s Shareholders. The 2015 Director Plan authorizes 400,000 shares of the company's
common stock available for issuance under the plan, and provides for an automatic increase every year in the amount of shares
available for issuance under the plan of 10% of the shares authorized under the plan.
Note 4: Short Term Investments
The Company’s
short term investments balance consists of short term bond mutual funds. In accordance with ASC Topic 320 (“Accounting
for Certain Investments in Debt and Equity Securities”), short term investments are accounted for as available for sale
securities with any changes in fair value to be reflected in other comprehensive income. The Company had a short term investments
balance $15.6 million as of both September 30, 2015 and March 31, 2015.
Note 5: Fair Value
The Company
carries various assets and liabilities at fair value in the Condensed Consolidated Balance Sheets. Fair value is defined as an
exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions
that market participants would use in pricing an asset or a liability. ASC Topic 820 (“Fair Value Measurements”) establishes
a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1 - Observable inputs that reflect
quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Include other inputs that are
directly or indirectly observable in the marketplace.
Level 3 - Unobservable inputs which are
supported by little or no market activity.
The fair value hierarchy
also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair
value. The Company’s cash equivalents and short term investments are classified within Level 1. Assets and liabilities measured
at fair value are summarized below:
| |
| | |
Fair Value Measurement at September 30, 2015 Using | |
| |
| | |
Quoted Prices | | |
Significant | | |
| |
| |
| | |
in Active | | |
Other | | |
Significant | |
| |
| | |
Markets for | | |
Observable | | |
Unobservable | |
| |
September 30, | | |
Identical Assets | | |
Inputs | | |
Inputs | |
(In thousands) | |
2015 | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Cash and cash equivalents - money market
funds | |
$ | 42,180 | | |
$ | 42,180 | | |
$ | - | | |
$ | - | |
Short term investments - bond
mutual funds | |
| 15,604 | | |
| 15,604 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
| |
$ | 57,784 | | |
$ | 57,784 | | |
$ | - | | |
$ | - | |
Note 6: Commitments and Contingencies
The Company
has settled complaints that had been filed with various states’ regulatory boards in the past. There can be no assurances
made that other states will not attempt to take similar actions against the Company in the future. The Company initiates litigation
to protect its trade or service marks. There can be no assurance that the Company will be successful in protecting its trade or
service marks. Legal costs related to the above matters are expensed as incurred.
Note 7: Discontinued Project Cost
During the
quarter ended September 30, 2014 the Company discontinued an information technology project related to a new software platform,
which was intended to be put into service and capitalized during the September quarter. The Company expensed a one-time project
charge of $1.7 million in the September 2014 quarter, the net after tax impact of this one-time charge was $1.1 million, or $0.05
diluted per share. The Company does not expect any additional future expenditures relating to this discontinued project. There
was no financial impact related to the discontinued project during the quarter ended September 30, 2015.
Note 8: Income Taxes
For the quarters
ended September 30, 2015 and 2014, the Company recorded an income tax provision of approximately $2.6 million and $1.6 million,
respectively, and for the six months ended September 30, 2015 and 2014, the Company recorded an income tax provision of approximately
$6.0 million and $4.5 million, respectively. The increase to the income tax provision for the three and six months ended September
30, 2015, is related to increased operating income. The increase to the income tax provision is also related to the one-time discontinued
project charge of $1.7 million, which was expensed in the quarter ended September 30, 2014, and the net after tax impact of this
one-time charge was $1.1 million, which reduced the income tax provision by approximately $600,000. The effective tax rate for
each of the quarters and six months ended September 30, 2015 and 2014 was approximately 37.0%.
Note 9: Changes in Stockholders’
Equity and Comprehensive Income (Loss):
Changes in stockholders’
equity for the six months ended September 30, 2015 are summarized below (in thousands):
| |
| | |
| | |
Accumulated | |
| |
Additional | | |
| | |
Other | |
| |
Paid-In | | |
Retained | | |
Comprehensive | |
| |
Capital | | |
Earnings | | |
Loss | |
| |
| | | |
| | | |
| | |
Beginning balance at March 31, 2015: | |
$ | 3,117 | | |
$ | 72,343 | | |
$ | (54 | ) |
Share based compensation | |
| 777 | | |
| - | | |
| - | |
Dividends declared | |
| - | | |
| (7,301 | ) | |
| - | |
Tax adjustment related to restricted stock | |
| 93 | | |
| - | | |
| - | |
Net income | |
| - | | |
| 10,259 | | |
| - | |
Net change in unrealized gain
(loss) on short term investments | |
| - | | |
| - | | |
| (19 | ) |
Ending balance at September 30, 2015: | |
$ | 3,987 | | |
$ | 75,301 | | |
$ | (73 | ) |
No shares of treasury
stock were purchased or retired in the six months ended September 30, 2015 and 2014.
Note 10: Subsequent Events
On October 19, 2015 our
Board of Directors declared a quarterly dividend of $0.18 per share. The Board established a November 2, 2015 record date and
a November 13, 2015 payment date. Based on the outstanding share balance as of October 27, 2015 the Company estimates the dividend
payable to be approximately $3.7 million.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Executive Summary
PetMed Express was incorporated
in the state of Florida in January 1996. The Company’s common stock is traded on the NASDAQ Global Select Market under the
symbol “PETS.” The Company began selling pet medications and other pet health products in September 1996. In March
2010 the Company started offering for sale additional pet supplies on its website, and these items are drop shipped to customers
by third party vendors. Presently, the Company’s product line includes approximately 3,000 of the most popular pet medications,
health products, and supplies for dogs and cats.
The Company markets its
products through national television, online, and direct mail/print advertising campaigns which aim to increase the recognition
of the “1-800-PetMeds” brand name, and “PetMeds” family of trademarks, increase traffic on its website
at www.1800petmeds.com, acquire new customers, and maximize repeat purchases. Approximately 81% of all sales were generated
via the Internet for the quarter ended September 30, 2015, compared to 80% for the quarter ended September 30, 2014. The Company’s
sales consist of products sold mainly to retail consumers. The three-month average purchase was approximately $80 and $75 per
order for the quarters ended September 30, 2015 and 2014, respectively, and the six-month average purchase was approximately $81
and $77 per order for the six months ended September 30, 2015 and 2014, respectively.
Critical Accounting Policies
Our discussion and analysis
of our financial condition and the results of our operations are based upon our Condensed Consolidated Financial Statements and
the data used to prepare them. The Company’s Condensed Consolidated Financial Statements have been prepared in accordance
with accounting principles generally accepted in the United States of America. On an ongoing basis we re-evaluate our judgments
and estimates including those related to product returns, bad debts, inventories, and income taxes. We base our estimates and
judgments on our historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering
available information. Actual results may differ from these estimates under different assumptions or conditions. Our estimates
are guided by observing the following critical accounting policies.
Revenue recognition
The Company
generates revenue by selling pet medication products and pet supplies primarily to retail consumers. The Company’s policy
is to recognize revenue from product sales upon shipment, when the rights of ownership and risk of loss have passed to the customer.
Outbound shipping and handling fees are included in sales and are billed upon shipment. Shipping expenses are included in cost
of sales. The majority of the Company’s sales are paid by credit cards and the Company usually receives the cash settlement
in two to three banking days. Credit card sales minimize accounts receivable balances relative to sales. The Company maintains
an allowance for doubtful accounts for losses that the Company estimates will arise from customers’ inability to make required
payments, arising from either credit card charge-backs or insufficient funds checks. The Company determines its estimates of the
uncollectibility of accounts receivable by analyzing historical bad debts and current economic trends. The allowance for doubtful
accounts was approximately $12,000 at September 30, 2015 compared to $8,000 at March 31, 2015.
Valuation of inventory
Inventories
consist of prescription and non-prescription pet medications and pet supplies that are available for sale and are priced at the
lower of cost or market value using a weighted average cost method. The Company writes down its inventory for estimated obsolescence.
The inventory reserve was approximately $61,000 at September 30, 2015 compared to $63,000 at March 31, 2015.
Advertising
The Company's advertising
expense consists primarily of television advertising, Internet marketing, and direct mail/print advertising. Television advertising
costs are expensed as the advertisements are televised. Internet costs are expensed in the month incurred and direct mail/print
advertising costs are expensed when the related catalogs, brochures, and postcards are produced, distributed, or superseded.
Accounting for income taxes
The Company
accounts for income taxes under the provisions of ASC Topic 740 (“Accounting for Income Taxes”), which generally
requires recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that
have been included in the Consolidated Financial Statements or tax returns. Under this method, deferred tax assets and liabilities
are determined based on differences between the financial reporting carrying values and the tax bases of assets and liabilities,
and are measured by applying enacted tax rates and laws for the taxable years in which those differences are expected to reverse.
Results of Operations
The following
should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and the related notes thereto
included elsewhere herein. The following table sets forth, as a percentage of sales, certain operating data appearing in the Company’s
Condensed Consolidated Statements of Comprehensive Income:
| |
Three Months Ended | | |
Six Months Ended | |
| |
September 30, | | |
September 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Sales | |
| 100.0 | % | |
| 100.0 | % | |
| 100.0 | % | |
| 100.0 | % |
Cost of sales | |
| 66.7 | | |
| 67.9 | | |
| 67.4 | | |
| 67.5 | |
Gross profit | |
| 33.3 | | |
| 32.1 | | |
| 32.6 | | |
| 32.5 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
General and administrative | |
| 9.5 | | |
| 9.3 | | |
| 8.7 | | |
| 8.7 | |
Advertising | |
| 11.0 | | |
| 12.0 | | |
| 11.0 | | |
| 12.9 | |
Discontinued project costs | |
| - | | |
| 3.0 | | |
| - | | |
| 1.3 | |
Depreciation | |
| 0.3 | | |
| 0.3 | | |
| 0.3 | | |
| 0.3 | |
Total operating expenses | |
| 20.8 | | |
| 24.6 | | |
| 20.0 | | |
| 23.2 | |
| |
| | | |
| | | |
| | | |
| | |
Income from operations | |
| 12.5 | | |
| 7.5 | | |
| 12.6 | | |
| 9.3 | |
| |
| | | |
| | | |
| | | |
| | |
Total other income | |
| 0.1 | | |
| - | | |
| 0.1 | | |
| 0.1 | |
| |
| | | |
| | | |
| | | |
| | |
Income before provision for income taxes | |
| 12.6 | | |
| 7.5 | | |
| 12.7 | | |
| 9.4 | |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes | |
| 4.7 | | |
| 2.8 | | |
| 4.7 | | |
| 3.5 | |
| |
| | | |
| | | |
| | | |
| | |
Net income | |
| 7.9 | % | |
| 4.7 | % | |
| 8.0 | % | |
| 5.9 | % |
Three Months Ended September 30, 2015 Compared
With Three Months Ended September 30, 2014, and Six Months Ended September 30, 2015 Compared With Six Months Ended September 30,
2014
Sales
Sales
decreased by approximately $851,000, or 1.5%, to approximately $56.7 million for the quarter ended September 30, 2015, from approximately
$57.6 million for the quarter ended September 30, 2014. For the six months ended September 30, 2015, sales decreased by approximately
$1.8 million, or 1.4%, to approximately $128.4 million compared to $130.1 million for the six months ended September 30, 2014.
The decrease in sales for the three and six months ended September 30, 2015 was primarily due to decreased new order sales offset
by increased reorder sales. The decrease in new order sales may be attributed to a decrease in advertising spending. The Company
acquired approximately 127,000 new customers for the quarter ended September 30, 2015, compared to approximately 152,000 new customers
for the same period the prior year. For the six months ended September 30, 2015 the Company acquired approximately 275,000 new
customers, compared to 336,000 new customers for the six months ended September 30, 2014. The following chart illustrates sales
by various sales classifications:
Three Months Ended September 30, |
Sales (In thousands) | |
2015 | | |
% | | |
2014 | | |
% | | |
$ Variance | | |
% Variance | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Reorder Sales | |
$ | 46,652 | | |
| 82.2 | % | |
$ | 46,627 | | |
| 81.0 | % | |
$ | 25 | | |
| 0.1 | % |
New Order Sales | |
$ | 10,073 | | |
| 17.8 | % | |
$ | 10,949 | | |
| 19.0 | % | |
$ | (876 | ) | |
| -8.0 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Net Sales | |
$ | 56,725 | | |
| 100.0 | % | |
$ | 57,576 | | |
| 100.0 | % | |
$ | (851 | ) | |
| -1.5 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Internet Sales | |
$ | 46,161 | | |
| 81.4 | % | |
$ | 46,204 | | |
| 80.2 | % | |
$ | (43 | ) | |
| -0.1 | % |
Contact Center Sales | |
$ | 10,564 | | |
| 18.6 | % | |
$ | 11,372 | | |
| 19.8 | % | |
$ | (808 | ) | |
| -7.1 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Net Sales | |
$ | 56,725 | | |
| 100.0 | % | |
$ | 57,576 | | |
| 100.0 | % | |
$ | (851 | ) | |
| -1.5 | % |
Six Months Ended September 30, |
Sales (In thousands) | |
2015 | | |
% | | |
2014 | | |
% | | |
$ Variance | | |
% Variance | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Reorder Sales | |
$ | 106,211 | | |
| 82.7 | % | |
$ | 105,115 | | |
| 80.8 | % | |
$ | 1,096 | | |
| 1.0 | % |
New Order Sales | |
$ | 22,148 | | |
| 17.3 | % | |
$ | 25,002 | | |
| 19.2 | % | |
$ | (2,854 | ) | |
| -11.4 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Net Sales | |
$ | 128,359 | | |
| 100.0 | % | |
$ | 130,117 | | |
| 100.0 | % | |
$ | (1,758 | ) | |
| -1.4 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Internet Sales | |
$ | 103,853 | | |
| 80.9 | % | |
$ | 104,217 | | |
| 80.1 | % | |
$ | (364 | ) | |
| -0.3 | % |
Contact Center Sales | |
$ | 24,506 | | |
| 19.1 | % | |
$ | 25,900 | | |
| 19.9 | % | |
$ | (1,394 | ) | |
| -5.4 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Net Sales | |
$ | 128,359 | | |
| 100.0 | % | |
$ | 130,117 | | |
| 100.0 | % | |
$ | (1,758 | ) | |
| -1.4 | % |
Going forward
sales may be adversely affected due to increased competition and consumers giving more consideration to price. The majority of
our product sales are affected by the seasons, due to the seasonality of mainly heartworm, and flea and tick medications. For
the quarters ended June 30, September 30, December 31, and March 31 of Fiscal 2015, the Company’s sales were approximately
32%, 25%, 21%, and 22%, respectively.
Cost of sales
Cost of sales
decreased by approximately $1.3 million, or 3.3%, to approximately $37.8 million for the quarter ended September 30, 2015, from
approximately $39.1 million for the quarter ended September 30, 2014. For the six months ended September 30, 2015, cost of sales
decreased by approximately $1.4 million, or 1.6%, to approximately $86.5 million compared to $87.9 million for the same period
in the prior year. The decrease in cost of sales is directly related to the decrease in sales during the quarter and six months
ended September 30, 2015. Cost of sales as a percent of sales was 66.7% and 67.9% for the quarters ended September 30, 2015 and
2014, respectively, and for the six months ended September 30, 2015 and 2014 the cost of sales was 67.4% and 67.5%, respectively.
The decrease to cost of sales as a percentage of sales for the quarter and six months ended September 30, 2015 can be mainly attributed
to a shift in sales to higher margin items.
Gross profit
Gross profit
increased by approximately $454,000, or 2.5%, to approximately $18.9 million for the quarter ended September 30, 2015, from approximately
$18.5 million for the quarter ended September 30, 2014. For the six months ended September 30, 2015 gross profit decreased by
approximately $352,000, or 0.8%, to approximately $41.9 million, compared to $42.2 million for the same period in the prior year.
Gross profit as a percentage of sales was 33.3% and 32.1% for the three months ended September 30, 2015 and 2014, respectively,
and for the six months ended September 30, 2015 and 2014, gross profit was 32.6% and 32.5%, respectively. The gross profit percentage
increases for the quarter and six months ended September 30, 2015 can be mainly attributed to a shift in sales to higher margin
items.
General and administrative expenses
General and
administrative expenses were approximately $5.4 million for both of the quarters ended September 30, 2015 and 2014. For the six
months ended September 30, 2015, general and administrative expenses decreased by approximately $69,000, or 0.6%, to approximately
$11.2 million from approximately $11.3 million for the six months ended September 30, 2014. The decrease in general and administrative
expenses for the six months ended September 30, 2015 was primarily due to the following: a $196,000 decrease in payroll expenses,
a $53,000 decrease in a one-time charge relating to state/county sales tax which was expensed in 2014; a $22,000 decrease in bank
service fees due to a decrease in sales; and a $66,000 net decrease in other expenses primarily related to travel expenses, professional
fees, and licenses. Offsetting the decrease was an $188,000 increase in bad debt expenses relating to increased credit card chargebacks
in the period, a $68,000 increase in property expenses, and a $12,000 increase in insurance expenses.
Advertising expenses
Advertising
expenses decreased by approximately $666,000, or 9.6%, to approximately $6.2 million for the quarter ended September 30, 2015,
from approximately $6.9 million for the quarter ended September 30, 2014. For the six months ended September 30, 2015, advertising
expenses decreased by approximately $2.7 million, or 15.9%, to approximately $14.1 million compared to advertising expenses of
approximately $16.8 million for the six months ended September 30, 2014. The decrease in advertising expenses for the three and
six months ended September 30, 2015 can be primarily attributed to a reduction in television advertising. The advertising costs
of acquiring a new customer, defined as total advertising costs divided by new customers acquired, increased to $49 for the quarter
ended September 30, 2015, compared to $45 for the quarter ended September 30, 2014. For the six months ended September 30, 2015
and 2014 the advertising costs of acquiring a new customer were $51 and $50, respectively. Advertising cost of acquiring a new
customer can be impacted by the advertising environment, the effectiveness of our advertising creative, increased advertising
spending, and price competition. Historically, the advertising environment fluctuates due to supply and demand. A more favorable
advertising environment may positively impact future new order sales, whereas a less favorable advertising environment may negatively
impact future new order sales.
As a percentage
of sales, advertising expense was 11.0% and 12.0% for the quarters ended September 30, 2015 and 2014, respectively, and for the
six months ended September 30, 2015 and 2014 advertising expense was 11.0% and 12.9%, respectively. The decrease in advertising
expense as a percentage of total sales for the quarter and six months ended September 30, 2015 can be attributed to a reduction
in advertising spending. The Company currently anticipates advertising as a percentage of sales to be approximately 10% for Fiscal
2016. However, the advertising percentage will fluctuate quarter to quarter due to seasonality and advertising availability. For
the fiscal year ended March 31, 2015, quarterly advertising expenses as a percentage of sales ranged between 8% and 14%.
Discontinued project costs
During the
quarter ended September 30, 2014 the Company discontinued an information technology project related to a new software platform,
which was intended to be put into service and capitalized during the September quarter. The Company expensed a one-time project
charge of $1.7 million in the September 2014 quarter, the net after tax impact of this one-time charge was $1.1 million, or $0.05
diluted per share. The Company does not expect any additional future expenditures relating to this discontinued project. There
was no financial impact related to the discontinued project during the quarter ended September 30, 2015.
Depreciation
Depreciation
expenses increased by approximately $27,000 to approximately $186,000 for the quarter ended September 30, 2015, from approximately
$159,000 for the quarter ended September 30, 2014. For the six months ended September 30, 2015 depreciation expenses increased
by approximately $55,000 to $377,000 compared to $322,000 for the same period in the prior year. The increase to depreciation
expense for the quarter and six months ended September 30, 2015 can be attributed to an increase in new property and equipment
additions.
Other income
Other income
increased by approximately $9,000 to approximately $51,000 for the quarter ended September 30, 2015 from approximately $42,000
for the quarter ended September 30, 2014. For the six months ended September 30, 2015 other income increased by approximately
$2,000 to approximately $97,000 compared to approximately $95,000 for the same period in the prior year. The increase to other
income for the quarter and six months ended September 30, 2015 can be primarily attributed to increased interest income. Interest
income may decrease in the future as the Company utilizes its cash balances on its share repurchase plan, with approximately $10.2
million remaining as of September 30, 2015, on any quarterly dividend payment, or on its operating activities.
Provision for income taxes
For the
quarters ended September 30, 2015 and 2014, the Company recorded an income tax provision of approximately $2.6 million and $1.6
million, respectively, and for the six months ended September 30, 2015 and 2014, the Company recorded an income tax provision
of approximately $6.0 million and $4.5 million, respectively. The increase to the income tax provision for the three and six months
ended September 30, 2015, is related to an increase in operating income. The increase to the income tax provision is also related
to the one-time discontinued project charge of $1.7 million, which was expensed in the quarter ended September 30, 2014, and the
net after tax impact of this one-time charge was $1.1 million, which reduced the income tax provision by approximately $600,000.
The effective tax rate for each of the quarters and six months ended September 30, 2015 and 2014 was approximately 37.0%. The
Company estimates its effective tax rate will be approximately 37.0% for Fiscal 2016.
Liquidity and Capital Resources
The Company’s
working capital at September 30, 2015 and March 31, 2015 was $76.9 million and $73.0 million, respectively. The $3.9 million increase
in working capital was primarily attributable to cash flow generated from operations, offset by dividends paid. Net cash provided
by operating activities was $14.0 million and $23.6 million for the six months ended September 30, 2015 and 2014, respectively.
This change can be attributed to a decrease in the Company’s inventory balance, compared to the same period in the prior
year, offset by an increase in net income for the six months ended September 30, 2015. Net cash used in investing activities was
$208,000 for the six months ended September 30, 2015, compared to net cash used in investing activities of $409,000 for the six
months ended September 30, 2014. This change can be mainly attributed to a decrease in property and equipment additions during
the six months ended September 30, 2015. Net cash used in financing activities was $7.3 million for the six months ended September
30, 2015, compared to $6.9 million for the same period in the prior year, which represented an increase in the dividend paid in
the period ended September 30, 2015.
As of September
30, 2015 the Company had approximately $10.2 million remaining under the Company’s share repurchase plan. Subsequent to
September 30, 2015, on October 19, 2015 our Board of Directors declared an $0.18 per share dividend. The Board established a November
2, 2015 record date and a November 13, 2015 payment date. Depending on future market conditions the Company may utilize its cash
and cash equivalents on the remaining balance of its current share repurchase plan, on dividends, or on its operating activities.
As of September 30, 2015 the Company had no outstanding lease commitments except for the lease for its 65,300 square foot facility.
We are not currently bound by any long or short term agreements for the purchase or lease of capital expenditures. To date we
have paid for any needed additions to our capital equipment infrastructure from working capital funds and anticipate this being
the case in the future. Presently, we have approximately $1.3 million forecasted for capital expenditures for the remainder of
Fiscal 2016, which will be funded through cash from operations. The Company’s primary source of working capital is cash
from operations. The Company presently has no need for alternative sources of working capital, and has no commitments or plans
to obtain additional capital.
Off-Balance Sheet Arrangements
The Company
had no off-balance sheet arrangements as of September 30, 2015.
Cautionary
Statement Regarding Forward-Looking Information
Certain information
in this Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the words
"believes," "intends," "expects," "may," "will," "should," "plans,"
"projects," "contemplates," "intends," "budgets," "predicts," "estimates,"
"anticipates," or similar expressions. These statements are based on our beliefs, as well as assumptions we have used
based upon information currently available to us. Because these statements reflect our current views concerning future events,
these statements involve risks, uncertainties, and assumptions. Actual future results may differ significantly from the results
discussed in the forward-looking statements. A reader, whether investing in our common stock or not, should not place undue reliance
on these forward-looking statements, which apply only as of the date of this quarterly report. When used in this quarterly report
on Form 10-Q, "PetMed Express," "1-800-PetMeds," "PetMeds," "PetMed," "PetMeds.com,"
"PetMed.com," "PetMed Express.com," "the Company," "we," "our," and "us"
refers to PetMed Express, Inc. and our subsidiaries.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
Market risk generally
represents the risk that losses may occur in the value of financial instruments as a result of movements in interest rates, foreign
currency exchange rates, and commodity prices. Our financial instruments include cash and cash equivalents, short term investments,
accounts receivable, and accounts payable. The book values of cash equivalents, short term investments, accounts receivable, and
accounts payable are considered to be representative of fair value because of the short maturity of these instruments. Interest
rates affect our return on excess cash and investments. As of September 30, 2015, we had $42.2 million in cash and cash equivalents
and $15.6 million in short term investments. A majority of our cash and cash equivalents and investments generate interest income
based on prevailing interest rates. A significant change in interest rates would impact the amount of interest income generated
from our excess cash and investments. It would also impact the market value of our investments. Our investments are subject to
market risk, primarily interest rate and credit risk. Our investments are managed by a limited number of outside professional
managers within investment guidelines set by our Board of Directors. Such guidelines include security type, credit quality, and
maturity, and are intended to limit market risk by restricting our investments to high-quality debt instruments with both short
and long term maturities. We do not hold any derivative financial instruments that could expose us to significant market risk.
At September 30, 2015, we had no debt obligations.
ITEM 4. CONTROLS AND PROCEDURES.
The Company’s management,
including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Rule 13a-15 promulgated under the Securities Exchange Act
of 1934, as amended) as of the quarter ended September 30, 2015, the end of the period covered by this report (the "Evaluation
Date"). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure
controls and procedures are effective such that the information relating to our Company, including our consolidated subsidiaries,
required to be disclosed by the Company in reports that it files or submits under the Exchange Act: (1) is recorded, processed,
summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and (2)
is accumulated and communicated to our management, including our principal executive officer and principal financial officer,
as appropriate, to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial
reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
part
ii - other information
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
Our operations
and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition,
results of operations, and trading price of our common stock. Please refer to our Annual Report on Form 10-K for Fiscal Year 2015
for additional information concerning these and other uncertainties that could negatively impact the Company.
ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS.
The
Company did not make any sales of unregistered securities during the second quarter of Fiscal 2016.
Issuer
Purchases of Equity Securities
None.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS
The following
exhibits are filed as part of this report.
| 10.11 | 2015 Outside Director Equity Compensation Restricted Stock Plan (Incorporated by reference to Exhibit B to the Registrant's Proxy Statement filed June 8, 2015). |
| 31.1 | Certification of Principal Executive
Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under
the Securities Exchange Act of 1934, as amended (filed herewith to Exhibit 31.1 of the
Registrant’s Report on Form 10-Q for the quarter ended September 30, 2015, Commission
File No. 000-28827). |
| 31.2 | Certification of Principal Financial
Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, promulgated under
the Securities Exchange Act of 1934, as amended (filed herewith to Exhibit 31.2 of the
Registrant’s Report on Form 10-Q for the quarter ended September 30, 2015, Commission
File No. 000-28827). |
| 32.1 | Certification Pursuant to 18
U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith to Exhibit 32.1 of the Registrant’s Report on Form 10-Q for
the quarter ended September 30, 2015, Commission File No. 000-28827). |
signatures
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
PETMED EXPRESS, INC.
(The “Registrant”)
Date: October 27, 2015
By: |
/s/ Menderes
Akdag |
|
|
Menderes Akdag |
|
|
|
|
|
Chief Executive Officer and President |
|
|
(principal executive officer) |
|
|
|
|
By: |
/s/ Bruce
S. Rosenbloom |
|
|
Bruce S. Rosenbloom |
|
|
|
|
|
Chief Financial Officer |
|
|
(principal financial and accounting officer) |
|
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C.20549
PETMED
EXPRESS, INC
FORM 10-Q
FOR THE QUARTER
ENDED:
SEPTEMBER
30, 2015
EXHIBITS
EXHIBIT
INDEX
Exhibit
Number |
Description |
Number of Pages
in Original
Document |
Incorporated
By
Reference |
|
|
|
|
|
|
|
31.1 |
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
1 |
** |
|
|
|
|
|
|
31.2 |
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
1 |
** |
|
|
|
|
|
|
32.1 |
Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
1 |
** |
** Filed herewith
Exhibit
31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
I, Menderes Akdag, certify that:
| 1. | I have reviewed this report on Form
10-Q for the quarter ended September 30, 2015 of PetMed Express, Inc.; |
| 2. | Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial
statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying
officers and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have: |
a) Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control
over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of
the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change
in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
| 5. | The registrant’s other certifying
officers and I have disclosed, based on our most recent evaluation of the internal control
over financial reporting, to the registrant’s auditors and the audit committee
of the registrant’s Board of Directors (or persons performing the equivalent functions): |
a) All significant deficiencies and
material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting.
|
October 27, 2015 |
|
|
|
|
|
|
By: |
/s/
Menderes Akdag |
|
|
Menderes Akdag |
|
|
Chief Executive Officer and President |
|
|
Exhibit
31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
I, Bruce S. Rosenbloom, certify that:
| 1. | I have reviewed this report on Form
10-Q for the quarter ended September 30, 2015 of PetMed Express, Inc.; |
| 2. | Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial
statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying
officers and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have: |
a) Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control
over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of
the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change
in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
| 5. | The registrant’s other certifying
officers and I have disclosed, based on our most recent evaluation of the internal control
over financial reporting, to the registrant’s auditors and the audit committee
of the registrant’s Board of Directors (or persons performing the equivalent functions): |
a) All significant deficiencies and
material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting.
|
October 27, 2015 |
|
|
|
|
|
|
By: |
/s/ Bruce S. Rosenbloom |
|
|
Bruce S. Rosenbloom |
|
|
Chief Financial Officer |
|
Exhibit
32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
I, Menderes Akdag, and I, Bruce S. Rosenbloom,
each certify to the best of our knowledge, based upon a review of the report on Form 10-Q for the quarter ended September 30,
2015 (the “Report”) of the Registrant, that:
| (1) | the Report fully complies with
the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and |
| (2) | the information contained in
the Report, fairly presents, in all material respects, the financial condition and results
of operations of the Registrant. |
|
Date: October 27, 2015 |
|
|
|
|
|
|
By: |
/s/ Menderes
Akdag |
|
|
Menderes Akdag |
|
|
Chief Executive Officer
and President |
|
By: |
/s/ Bruce
S. Rosenbloom |
|
|
Bruce S. Rosenbloom |
|
|
Chief Financial Officer |
|
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