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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K/A
 (Amendment No. 1)
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from               to
 Commission File Number 1-3473
 PET DRX CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    56-2517815(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)215 Centerview Drive, Suite 360Brentwood, Tennessee
    
    37027(Address of principal executive offices)
    
    (Zip Code)
 (615) 369-1914
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, par value $.0001 per share
    
    Nasdaq Capital MarketWarrants, exercisable for Common Stock at an exercise price of $6.00 per
share
    
    Nasdaq Capital MarketUnits, each consisting of one share of Common Stock and one Warrant
    
    Nasdaq Capital Market
 None
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE: None




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EXPLANATORY NOTE




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##### 



INDEX
TO FORM 10-K
 PagePART IIIItem 10. Directors, Executive Officers, and Corporate Governance
    
    
    1Item 11. Executive Compensation
    
    
    6Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    14Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    17Item 14. Principal Accountant Fees and Services
    
    
    20PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    21EX-31.1EX-31.2




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PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
  Name
    
    Age
    
    Current Position with Pet DRxGene E. Burleson
    
    
    68
    
    
    Chairman of the Board and Chief Executive OfficerGary A. Brukardt
    
    
    63
    
    
    DirectorRichard Johnston
    
    
    74
    
    
    DirectorJoel Kanter
    
    
    52
    
    
    DirectorRichard O. Martin
    
    
    69
    
    
    DirectorJ. David Reed, DVM
    
    
    60
    
    
    Director and Senior Vice President of OperationsZubeen Shroff
    
    
    44
    
    
    Director
 BOARD VOTING AGREEMENT




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OUR BOARD OF DIRECTORS
 GENE E. BURLESON,
 GARY A. BRUKARDT,
 RICHARD JOHNSTON,
 2




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JOEL KANTER,
 RICHARD O. MARTIN, PHD
 3




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J. DAVID REED, DVM,
 ZUBEEN SHROFF,
 4




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Audit Committee
  Code of Ethics
  SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
   5




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Item 11. Executive Compensation
 Executive Compensation
 Summary Compensation Table for Fiscal Year 2008
  Non-Equity
    
    NonqualifiedStock
    
    Option
    
    Incentive Plan
    
    Deferred
    
    All OtherAwards
    
    Awards
    
    Compensation
    
    Compensation
    
    CompensationName and Principal Position
    
    Year
    
    Salary ($)
    
    Bonus ($)
    
    ($)
    
    ($)(1)
    
    ($)
    
    Earnings ($)
    
    ($)(2)
    
    Total ($)Gene E. Burleson
Chairman and Chief
Executive 
Officer(3)

    
    2008
    
    
    $
    94,091
    
    
    
    
    
    
    
    
    
    
    $
    161,891
    (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    255,982Harry L. Zimmerman
Executive Vice President and Chief
Financial Officer(5)
    
    
    2008
    
    
    $
    70,750
    
    
    
    
    
    
    
    
    
    
    $
    37,564
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    108,314George A. Villasana
    
    
    2008
    
    
    $
    240,000
    
    
    
    
    
    
    
    
    
    
    $
    257,417
    
    
    
    
    
    
    
    
    
    
    $
    21,859
    (14)
    
    $
    519,276Executive Vice President, General
Counsel and Secretary(6)
    
    
    2007
    
    
    $
    109,744
    
    
    $
    90,000
    (7)
    
    
    
    
    
    $
    26,609
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    226,353Robert Wallace
    
    
    2008
    
    
    $
    225,000
    
    
    
    
    
    
    
    
    
    
    $
    92,470
    
    
    
    
    
    
    
    
    
    
    $
    12,194
    (15)
    
    $
    329,664Former Chief Executive
Officer(8)
    
    
    2007
    
    
    $
    262,955
    
    
    $
    150,000
    (9)
    
    
    
    
    
    $
    7,693
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    420,648Steven T. Johnson
    
    
    2008
    
    
    $
    350,000
    
    
    
    
    
    
    
    
    
    
    $
    298,954
    
    
    
    
    
    
    
    
    
    
    $
    383,608
    (16)
    
    $
    1,032,562Former President and Chief
Operating
Officer(10)
    
    
    2007
    
    
    $
    152,564
    
    
    $
    175,000
    (11)
    
    
    
    
    
    $
    16,937
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    344,501Gregory J. Eisenhauer
    
    
    2008
    
    
    $
    220,000
    
    
    
    55,000
    (13)
    
    
    
    
    
    $
    144,692
    
    
    
    
    
    
    
    
    
    
    $
    57,610
    (17)
    
    $
    477,302Former Executive Vice President and
Chief Financial Officer(12)
    
    
    2007
    
    
    $
    60,000
    
    
    
    
    
    
    
    
    
    
    $
    8,471
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    68,471
 
 (1)
    
    Represents the fair value of stock options granted in 2008 and prior periods for which
compensation cost was recognized during the year without regard to estimated forfeitures
valued in accordance with FAS 123 (R). For a description of the assumptions used in the
calculation of these amounts, please refer to Note 14 contained in the Companys audited
consolidated financial statements for the year ended December 31, 2008 included in the
Companys Annual Report on Form 10-K.(2)
    
    For 2007, the aggregate amount of perquisites and other personal benefits for each of
our named executive officers was less than $10,000.(3)
    
    Mr. Burleson joined the Company in September 2008.(4)
    
    Of this amount, $114,489 reflects 101,000 stock options awarded for his service as a
non-employee director and $47,401 reflects 315,472 stock options awarded for his service as
Chief Executive Officer.(5)
    
    Mr. Zimmerman joined the Company in September 2008.(6)
    
    Mr. Villasana joined the Company in June 2007.(7)
    
    Reflects a discretionary bonus award to Mr. Villasana pursuant to his employment
agreement with the Company, with $69,600 of this award representing his prorated target
bonus payment and an additional award of $20,400 in recognition of his performance during
2007 related to certain transition matters including the Merger.(8)
    
    Mr. Wallace served as our Chief Executive Officer until he resigned effective September
25, 2008.(9)
    
    Reflects a discretionary bonus awarded to Mr. Wallace pursuant to his employment
agreement with the Company.(10)
    
    Mr. Johnson joined the Company in July 2007. Mr. Johnson resigned from his position
with the Company effective December 31, 2008.(11)
    
    Of this amount, $50,000 reflects a one-time signing bonus to Mr. Johnson and $125,000
reflects a guaranteed bonus for 2007, both of which were awarded pursuant to the employment
agreement between Mr. Johnson and the Company discussed below.(12)
    
    Mr. Eisenhauer joined the Company in September 2007. Mr. Eisenhauer resigned from his
position with the Company effective November 30, 2008.(13)
    
    Reflects a retention bonus earned by Mr. Eisenhauer for continuing his employment as
principal financial officer of the Company through a predetermined transition period.(14)
    
    Consists of disability insurance premiums of $904, medical insurance premiums of
$3,647, contribution payments to an HSA account in the amount of $1,250, dental insurance
premiums of $477, life insurance premiums of $676, and relocation expense reimbursements of
$14,905.(15)
    
    Consists of disability insurance premiums of $549, medical insurance premiums of
$5,231, dental insurance premiums of $358, life insurance premiums of $437, and
contributions to a 401 (k) plan account of $5,619.(16)
    
    Consists of disability insurance premiums of $876, medical insurance premiums of
$6,161, contribution payments to an HSA account in the amount of $2,500, dental insurance
premiums of $477, life insurance premiums of $582, contributions to a 401 (k) plan account
of $3,911, and relocation expense reimbursements of $84,679. Mr. Johnson also received
$9,423 in his final paycheck for seven accrued but unused vacation days from 2008 and will
receive an amount equal to $275,000 in cash payable in two equal installments as follows:
$137,500 was paid on March 2, 2009 and $137,500 will be paid on May 1, 2009.(17)
    
    Consists of disability insurance premiums of $876, medical insurance premiums of
$6,651, contribution payments to an HSA account in the amount of $5,000, dental insurance
premiums of $477, life insurance premiums of $582, contributions to a 401 (k) plan account
of $3,007, and relocation expense reimbursements of $41,018. 6




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Employment Agreements
  Gene E. Burleson
 Harry L. Zimmerman
 George A. Villasana
 7




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Robert Wallace
 8




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Steven T. Johnson
 9




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Gregory J. Eisenhauer
 10




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11




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Outstanding Equity Awards At 2008 Fiscal Year-End
  Option Awards(d)Equity(c)
    
    Incentive Plan(b)
    
    Number of
    
    Awards:Number of
    
    Securities
    
    Number ofSecurities
    
    Underlying
    
    Securities
    
    (e)Underlying
    
    Unexercised
    
    Underlying
    
    Option
    
    (f)Unexercised
    
    Options (#)
    
    Unexercised
    
    Exercise
    
    Option(a)
    
    Options (#)
    
    Unexercisable
    
    Unearned
    
    Price
    
    ExpirationName
    
    Exercisable (1)
    
    (1)
    
    Options (#)
    
    ($)(2)
    
    DateGene E. Burleson
    
    
    36,000
    (3)
    
    
    0
    
    
    
    
    
    
    $
    6.50
    
    
    
    3/14/20180
    
    
    
    65,000
    (4)
    
    
    
    
    
    $
    6.50
    
    
    
    3/14/2018105,157
    
    
    
    210,315
    (5)
    
    
    
    
    
    $
    1.00
    
    
    
    11/18/2018Harry L. Zimmerman
    
    
    83,333
    
    
    
    166,667
    (6)
    
    
    
    
    
    $
    1.00
    
    
    
    11/18/2018George A. Villasana
    
    
    77,100
    (7)
    
    
    0
    
    
    
    
    
    
    $
    6.16
    
    
    
    7/5/201712,382
    
    
    
    24,766
    (8)
    
    
    
    
    
    $
    6.16
    
    
    
    11/28/201721,026
    
    
    
    42,055
    (8)
    
    
    
    
    
    $
    3.18
    
    
    
    11/28/20170
    
    
    
    57,905
    (9)
    
    
    
    
    
    $
    6.70
    
    
    
    1/10/2018Robert Wallace (10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Steven T. Johnson (11)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gregory J. Eisenhauer
(12)
    
    
    58,408
    
    
    
    
    
    
    
    
    
    
    $
    6.16
    
    
    
    11/29/200931,540
    
    
    
    
    
    
    
    
    
    
    $
    3.18
    
    
    
    11/29/2009
 
 (1)
    
    The amounts listed in this column reflect the number of
shares of Pet DRx common stock issuable upon exercise of the option.
To the extent any of these options previously represented the right
to receive shares of PVGI common stock, as a result of the Merger,
these options now represent the right to receive Pet DRxs
common stock, with the number of shares underlying the options
adjusted by multiplying the number of PVGI common stock by the
exchange ratio in the Merger.(2)
    
    Reflects the adjustment of the option exercise price in the Merger by dividing the PVGI
exercise price by the exchange ratio in the Merger. The exercise prices listed in this
column represent the exercise price paid upon the exercise of the option to receive shares
of Pet DRx common stock.(3)
    
    These options immediately vested on 03/14/2008.(4)
    
    These options vested in full on 01/04/2009.(5)
    
    33.33% of these options vest on 12/31/2008, 33.33% vest on 12/31/2009 and 33.33% vest on
12/31/2010.(6)
    
    33.33% of these options vest on 12/31/2008, 33.33% vest on 12/31/2009 and 33.33% vest on
12/31/2010.(7)
    
    These options fully vested on the date of the Merger.(8)
    
    33.33% of these options vest on 6/12/2008, 33.33% vest on 6/12/2009, and 33.33% vest on
6/12/2010.(9)
    
    33.33% of these options vest on 01/10/09, 33.33% vest on 01/10/2010 and 33.33% vest on
01/10/2011.(10)
    
    Mr. Wallace voluntarily resigned from his employment with us effective September 25, 2008
and, therefore, he had no outstanding options as of December 31, 2008.(11)
    
    Mr. Johnson voluntarily resigned from his employment with us effective December 31, 2008
and, therefore, he had no outstanding options as of December 31, 2008.(12)
    
    Due to Mr. Eisenhauers death on November 29, 2008, Mr. Eisenhauers vested options will
expire on November 29, 2009. 12




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NON-EMPLOYEE DIRECTOR COMPENSATION IN FISCAL YEAR 2008
    Fees
    
    
    
    
    
    
    
    
    
    Non-Equity
    
    NonqualifiedEarned
    
    Stock
    
    Option
    
    Incentive Plan
    
    Deferred
    
    All Otheror Paid in
    
    Awards
    
    Awards
    
    Compensation
    
    Compensation
    
    CompensationName
    
    Cash ($)
    
    ($)
    
    ($)(1)
    
    ($)
    
    Earnings ($)
    
    ($)
    
    Total ($)Gary A. Brukardt
    
    
    
    
    
    
    
    
    
    $
    7,226
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,226Richard Johnston
    
    
    
    
    
    
    
    
    
    $
    102,696
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    102,696Joel Kanter
    
    
    
    
    
    
    
    
    
    $
    116,411
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    116,411Richard Martin
    
    
    
    
    
    
    
    
    
    $
    100,767
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    100,767Keith Rosenbloom
(2)
    
    
    
    
    
    
    
    
    
    $
    117,283
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    117,283Zubeen Shroff (3)
    
    
    
    
    
    
    
    
    
    $
    111,837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    111,837
 
 (1)
    
    Represents the fair value of stock options granted in prior periods for which compensation
cost was recognized during the year without regard to estimated forfeitures valued in
accordance with FAS 123(R). As of December 31, 2008, each non-employee director held the
following aggregate number of stock options: Gary A. Brukardt, 65,000 options; Richard
Johnston, 108,756 options; Joel Kanter, 120,756 options; Richard Martin 89,000 options; Keith
Rosenbloom, 0 options; and Zubeen Shroff, 0 options.(2)
    
    Mr. Rosenbloom ceased to serve as a director of the Company on November 18, 2008, and,
therefore, he had no outstanding options as of December 31, 2008.(3)
    
    Mr. Shroff ceased to serve as a director of the Company on December 17, 2008, and,
therefore, he had no outstanding options as of December 31, 2008. He rejoined the board of
directors on March 18, 2009 and has since been granted a new option award. 13




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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 STOCK OWNERSHIP INFORMATION
  
    
    each person known by us to be the beneficial owner of more than 5% of Pet DRxs
outstanding 23,660,460 shares of common stock; and
    
    each of the named executive officers (as identified in Executive Compensation
above) and directors of Pet DRx; and all of the executive officers and directors of Pet
DRx as a group.
   Actual
    
    Pro Forma**Percent of
    
    
    
    
    
    Percent ofName and Address of Beneficial
    
    Number of
    
    Outstanding
    
    Number of
    
    OutstandingOwners (1)
    
    Shares
    
    Common Stock
    
    Shares
    
    Common StockGene E. Burleson (2)
    
    
    1,318,760
    
    
    
    5.44
    %
    
    
    2,061,067
    
    
    
    8.23
    %Harry L. Zimmerman (3)
    
    
    166,111
    
    
    
    *
    
    
    
    281,495
    
    
    
    1.18
    %George Villasana (4)
    
    
    188,002
    
    
    
    *
    
    
    
    188,002
    
    
    
    *Steven T. Johnson (5)
    
    
    38,550
    
    
    
    *
    
    
    
    38,550
    
    
    
    *Gregory J. Eisenhauer (6)
    
    
    89,950
    
    
    
    *
    
    
    
    89,950
    
    
    
    *Robert Wallace (7)
    
    
    1,524,779
    
    
    
    6.44
    %
    
    
    1,524,779
    
    
    
    6.44
    %Joel Kanter (8)
    
    
    340,980
    
    
    
    1.43
    %
    
    
    436,172
    
    
    
    1.83
    %Richard Martin (9)
    
    
    340,220
    
    
    
    1.43
    %
    
    
    340,220
    
    
    
    1.43
    %Zubeen Shroff (10)
    
    
    4,408,410
    
    
    
    18.41
    %
    
    
    9,023,794
    
    
    
    31.59
    %Richard Johnston (11)
    
    
    2,219,449
    
    
    
    9.31
    %
    
    
    4,527,141
    
    
    
    17.31
    %J. David Reed (12)
    
    
    511,360
    
    
    
    2.16
    %
    
    
    536,360
    
    
    
    2.26
    %Gary Brukardt (13)
    
    
    146,473
    
    
    
    *
    
    
    
    146,473
    
    
    
    *Keith Rosenbloom (14)
    
    
    181,015
    
    
    
    *
    
    
    
    181,015
    
    
    
    *Camden entities (15)
    
    
    2,128,037
    
    
    
    8.99
    %
    
    
    4,435,729
    
    
    
    17.08
    %Galen entities (16)
    
    
    4,390,385
    
    
    
    18.35
    %
    
    
    9,005,769
    
    
    
    31.56
    %Knott entities (17)
    
    
    2,403,035
    
    
    
    9.88
    %
    
    
    3,556,881
    
    
    
    13.96
    %Wynnefield entities (18)
    
    
    3,971,669
    
    
    
    15.69
    %
    
    
    5,124,515
    
    
    
    19.37
    %All directors and
executive officers as a
group (13 individuals)
(19)
    
    
    11,473,979
    
    
    
    44.86
    %
    
    
    12,451,862
    
    
    
    46.89
    %
 
 *
    
    Less than 1%.**
    
    Gives effect to issuance of common stock upon the exercise of warrants issued in the first
quarter of 2009, which are not exercisable until stockholder approval is obtained. We plan to
seek stockholder approval of these warrants at the 2009 annual meeting of stockholders. 14




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(1)
    
    Unless otherwise indicated, the business address of each of the individuals is 215 Centerview
Drive, Suite 360, Brentwood, Tennessee 37027. The persons and entities named in the table
have sole voting and investment power with respect to all shares beneficially owned by them,
except as noted below.(2)
    
    Includes (i) 284,835 shares of common stock issuable upon exercise of warrants and options
and the conversion of convertible promissory notes within 60 days of March 31, 2009 and (ii)
178,954 shares subject to the IPO Escrow Agreement.(3)
    
    Consists entirely of shares of common stock issuable upon exercise of options and the
conversion of convertible promissory notes within 60 days of March 31, 2009.(4)
    
    Consists entirely of shares of common stock issuable upon exercise of options within 60 days
of March 31, 2009.(5)
    
    Mr. Johnson resigned from the Company effective as of December 31, 2008. The number of
shares beneficially owned by Mr. Johnson is based solely on the information provided on a Form
4 filed with the SEC on January 8, 2008.(6)
    
    Consists entirely of shares of common stock issuable upon exercise of options within 60 days
of March 31, 2009. Mr. Eisenhauer voluntary resigned from the Company effective November
2008. The number of shares beneficially owned by Mr. Eisenhauer is based solely on the
information provided on Forms 4 filed with the SEC on January 8, 2008, January 14, 2008 and
April 1, 2008.(7)
    
    Includes 433,928 shares of common stock owned by Gateway Advisors, of which Mr. Wallace has a
majority interest. Mr. Wallace resigned from the Company effective as of September 25, 2008.
The number of shares beneficially owned by Mr. Wallace is based solely on the information
provided on a Form 4 filed with the SEC on January 8, 2008. Mr. Wallaces obligation to report
his ownership of Pet DRx securities ceased as of the date of his resignation. Accordingly, the
Company cannot provide assurance that Mr. Wallaces beneficial ownership of Pet DRx securities
as reported herein is current.(8)
    
    Includes (i) 39,854 shares of common stock issuable to Mr. Kanter upon exercise of options
within 60 days of March 31, 2009, (ii) 30,427 shares of common stock and 25,837 shares of
common stock issuable upon exercise of warrants within 60 days of March 31, 2009 by Windy
City, Inc., a Delaware corporation (WCI), over which Mr. Kanter, as WCIs President, is
deemed to have sole investment and voting control, and (iii) 57,825 shares of common stock and
6,250 shares of common stock issuable upon conversion of convertible promissory notes within
60 days of March 31, 2009 by Kanter Family Foundation, an Illinois not-for-profit corporation
(KFF), over which Mr. Kanter, as KFFs President, is deemed to have sole investment and
voting control. Mr. Kanter disclaims beneficial ownership of the shares of common stock held
by WGI and KFF, except to the extent of his pecuniary interest therein.(9)
    
    Includes (i) 171,047 shares of common stock issuable upon exercise of warrants and options
within 60 days of March 31, 2009 and (ii) 84,587 shares subject to the IPO Escrow Agreement.(10)
    
    The business address is 680 Washington Boulevard, 11th Floor, Stamford, Connecticut 06901.
Galen Partners IV, L.P. has shared voting and investment power over 3,819,015 shares of common
stock and 238,933 shares of common stock issuable upon exercise of warrants and options and
the conversion of convertible promissory notes within 60 days of March 31, 2009. Galen
Partners International IV, L.P. has shared voting and investment power over 303,419 shares of
common stock and 19,259 shares of common stock issuable upon exercise of warrants and options
and the conversion of convertible promissory notes within 60 days of March 31, 2009. Includes
85,976 shares of common stock issuable to Mr. Shroff upon exercise of warrants and options
within 60 days of March 31, 2009. Mr. Shroff is a managing member of Claudius IV, L.L.C.
which serves as general partner of Galen Partners IV, L.P. and Galen Partners International
IV, L.P. Mr. Shroff disclaims beneficial ownership of the shares of common stock held by
Galen Partners IV, L.P. and Galen Partners International IV, L.P. except to the extent of his
pecuniary interest therein.(11)
    
    The business address is 500 East Pratt Street, Suite 1200, Baltimore, Maryland 21202.
Richard Johnston has shared voting and investment power over 2,028,037 shares of common stock.
Camden Partners Strategic Fund III, L.P. has shared voting and investment power over
1,947,119 shares of common stock and 96,010 shares of common stock issuable upon conversion of
convertible promissory notes within 60 days of March 31, 2009. Camden Partners Strategic Fund
III-A, L.P. has shared voting and investment power over 80,918 shares of common stock and
3,990 shares of common stock issuable upon conversion of convertible promissory notes within
60 days of March 31, 2009. Includes 91,410 shares of common stock issuable to Mr. Johnston
upon exercise of options within 60 days of March 31, 2009. Richard M. Johnston is a managing
member of Camden Partners Strategic Manager, LLC, the managing member of Camden Partners
Strategic III, LLC, the general partner of the Camden Funds. The other managing members of
Camden Partners Strategic Manager, LLC, are David L. Warnock, Richard M. Berkeley, and Donald
W. Hughes. Mr. Johnston disclaims beneficial ownership of the shares of common stock held by
Camden Partners Strategic Fund III, L.P. and Camden Partners Strategic Fund III-A, L.P. except
to the extent of his pecuniary interest therein.(12)
    
    Includes 2,500 shares of common stock issuable upon conversion of convertible promissory
notes within 60 days of March 31, 2009.(13)
    
    Includes (i) 23,024 shares of common stock issuable upon exercise of warrants within 60 days
of March 31, 2009 and (ii) 61,725 shares subject to the IPO Escrow Agreement. On September
25, 2008, Mr. Brukardt was appointed as a director of the Company effective as of September
25, 2008, filling the vacancy created by the resignation of Mr. Wallace described above.(14)
    
    Includes (i) 80,955 shares of common stock which are held in a trust for the benefit of Mr.
Rosenbloom, of which Mr. Rosenbloom is also a trustee, and (ii) 100,060 shares of common stock
issuable upon exercise of warrants within 60 days of March 31, 2009. Mr. Rosenbloom served as
a director of the Company until November 18, 2008. The number of shares beneficially owned by
Mr. Rosenbloom is based solely on the information provided on Form 3 filed with the SEC on
January 22, 2008 and Forms 4 filed with the SEC on March 18, 2008 and May 9, 2008. Mr.
Rosenblooms obligation to report his ownership of Pet DRx securities ceased as of the date
that he ceased to serve as a director of the 15




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Company. Accordingly, the Company cannot provide assurance that Mr. Rosenblooms beneficial
ownership of Pet DRx securities as reported herein is current.(15)
    
    The business address is 500 East Pratt Street, Suite 1200, Baltimore, Maryland 21202. Each
of Richard Johnston, David L. Warnock, Richard M. Berkeley, and Donald W. Hughes has shared
voting and investment power over 2,028,037 shares of common stock. Camden Partners Strategic
Fund III, L.P. has shared voting and investment power over 1,947,119 shares of common stock
and 96,010 shares of common stock issuable upon conversion of convertible promissory notes
within 60 days of March 31, 2009. Camden Partners Strategic Fund III-A, L.P. has shared
voting and investment power over 80,918 shares of common stock and 3,990 shares of common
stock issuable upon conversion of convertible promissory notes within 60 days of March 31,
2009. Each of Richard M. Johnston, David L. Warnock, Richard M. Berkeley, and Donald W.
Hughes is a managing member of Camden Partners Strategic Manager, LLC, the managing member of
Camden Partners Strategic III, LLC, the general partner of the Camden Funds.(16)
    
    The business address is 680 Washington Boulevard, 11th Floor, Stamford, Connecticut 06901.
Galen Partners IV, L.P. has shared voting and investment power over 3,819,015 shares of common
stock and 238,933 shares of common stock issuable upon exercise of warrants and options and
the conversion of convertible promissory notes within 60 days of March 31, 2009. Galen
Partners International IV, L.P. has shared voting and investment power over 303,419 shares of
common stock and 19,259 shares of common stock issuable upon exercise of warrants and options
and the conversion of convertible promissory notes within 60 days of March 31, 2009. Galen
Employee Fund IV, L.P has shared voting and investment power over 5,885 shares of common
stock, and 367 shares of common stock issuable upon exercise of warrants and options and the
conversion of convertible promissory notes within 60 days of March 31, 2009. Galen Associates
serves as investment advisor to Galen Partners IV, L.P., Galen Partners International IV, L.P.
and Galen Employee Fund IV, L.P. Claudius IV, L.L.C. serves as general partner of Galen
Partners IV, L.P. and Galen Partners International IV, L.P. The managing members of Claudius
IV, LLC are Zubeen Shroff, Bruce Wesson, L. John Wilkerson and David Jahns. Wesson
Enterprises, Inc., which is controlled by Mr. Wesson, is the general partner of Galen Employee
Fund IV, L.P.(17)
    
    Based on a Schedule 13G/A and a Form 4 filed by Mr. Knott on January 16, 2008 and April 3,
2009, respectively, and the participation by the Knott entities in the private placement of
the Senior Notes and Warrants. The business address is 485 Underhill Boulevard, Suite 205,
Syosset, New York 11791. Each of David M. Knott and Dorset Management Corporation has sole
voting power over 2,201,103 shares of common stock, shared voting power over 124,971 shares of
common stock, sole investment power over 2,353,035 shares of common stock and sole voting and
investment power over 1,000 shares of common stock issuable upon the conversion of convertible
promissory notes within 60 days of March 31, 2009, Knott Partners L.P. has sole voting and
investment power over 512,779 shares of common stock and 250,400 shares of common stock
issuable upon the exercise of warrants and the conversion of convertible promissory notes
within 60 days of March 31, 2009, Knott Partners Offshore Master Fund, L.P. has sole voting
and investment power over 746,686 shares of common stock and 259,900 shares of common stock
issuable upon the exercise of warrants and the conversion of convertible promissory notes
within 60 days of March 31, 2009, Shoshone Partners, L.P. has sole voting and investment power
over 352,026 shares of common stock and 117,000 shares of common stock issuable upon the
exercise of warrants and the conversion of convertible promissory notes within 60 days of
March 31, 2009, and Mulsanne Partners, L.P. has sole voting and investment power over 372,212
shares of common stock and 4,000 shares of common stock issuable upon the conversion of
convertible promissory notes within 60 days of March 31, 2009. Mr. Knott is the managing
member of Knott Partners Management, LLC, a New York limited liability company, that is the
sole General Partner of Shoshone Partners, L.P., a Delaware limited partnership (Shoshone),
Mulsanne Partners, L.P., a Delaware limited partnership (Mulsanne) and Knott Partners
Offshore Master Fund, L.P., a Cayman Islands Exempted Limited Partnership (Offshore) and
managing general partner of Knott Partners, L.P., a New Jersey limited partnership (Knott
Partners and together with Shoshone, Mulsanne and Offshore, the Partnerships). Mr. Knott
is also the sole shareholder, Director and President of Dorset Management Corporation, which
provides investment management services to the Partnerships and a limited number of other
foreign and domestic individuals and entities. Except with respect to Knott Partners, L.P.,
Knott Partners Offshore Master Fund, L.P., and Shoshone Partners, L.P., in which Mr. Knott
owns a beneficial interest, Mr. Knott disclaims beneficial ownership therein except to the
extent ultimately realized. Each of Knott Partners, L.P., Knott Partners Offshore Master
Fund, L.P., Shoshone Painters, L.P., Mulsanne Partners, L.P. and the institutional managed
accounts for which Dorset Management Corporation provides investment management services
disclaims beneficial ownership of securities reported as owned by any other party.(18)
    
    Based solely upon information set forth in a Form 4 and a Schedule 13D/A filed with the SEC
on April 7, 2009 and April 8, 2009, respectively. The business address is 450 Seventh Avenue,
Suite 509, New York, New York 10123. Wynnefield Partners Small Cap Value, L.P. has sole
voting and investment power over 279,615 shares of common stock and 27,500 shares of common
stock issuable upon exercise of warrants and the conversion of convertible promissory notes
within 60 days of March 31, 2009, Wynnefield Partners Small Cap Value, L.P. I has sole voting
and investment power over 386,300 shares of common stock and 28,500 shares of common stock
issuable upon exercise of warrants within 60 days of March 31, 2009, Wynnefield Small Cap
Value Offshore Fund, Ltd. has sole voting and investment power over 1,657,254 shares of common
stock and 1,542,500 shares of common stock issuable upon exercise of warrants within 60 days
of March 31, 2009, Wynnefield Capital Management, LLC has sole voting and investment power
over 665,915 shares of common stock and 56,000 shares of common stock issuable upon exercise
of warrants within 60 days of March 31, 2009, Wynnefield Capital, Inc. has sole voting and
investment power over 1,657,254 shares of common stock and 1,542,500 shares of common stock
issuable upon exercise of warrants within 60 days of March 31, 2009, and each of Nelson Obus
and Joshua Landes has sole voting and investment power over 2,323,169 shares of common stock
and 1,598,588 shares of common stock issuable upon exercise of warrants within 60 16




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days of March 31, 2009, but as to which each disclaims beneficial ownership except to the
extent of his pecuniary interest therein. Wynnefield Capital Management, LLC is the sole
general partner of Wynnefield Partners Small Cap Value, L.P. and Wynnefield Partners Small
Cap Value, L.P. I. Wynnefield Capital, Inc. is the sole investment manager of Wynnefield
Small Cap Value Offshore Fund, Ltd. Each of Nelson Obus and Joshua Landes is a co-managing
member of Wynnefield Capital Management, LLC and a principal executive officer of Wynnefield
Capital, Inc.(19)
    
    Includes 1,485,502 shares of common stock issuable upon exercise of options and warrants and
the conversion of convertible promissory notes within 60 days of March 31, 2009. Change in Control
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
 Certain Relationships and Related Transactions
  17




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18




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Director Independence
  19




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Item 14. Principal Accountant Fees and Services
  Fiscal
    
    
    Fiscal2008
    
    
    2007Audit Fees(1)
    
    $
    613,000
    
    
    $
    493,000Audit Related Fees(2)
    
    $
    
    
    
    $
    Tax Fees(3)
    
    $
    
    
    
    $
    All Other Fees(4)
    
    $
    
    
    
    $
    Total Fees
    
    $
    613,000
    
    
    $
    493,000
 
 (1)
    
    For the fiscal years ended December 31,
2008 and 2007, SingerLewak, our principal
accountant for 2008, billed fees of
$603,000 and $325,000, respectively for the
services they performed throughout those
years, including audit work performed in
connection with services provided for
privately-held PVGI prior to the merger,
which is now our wholly-owned subsidiary,
the preparation of our financial statements
included in our Annual Report on Form 10-K
for the fiscal year ended December 31,
2008, and a review of our financial
statements included in our Form 10-Qs
during 2008. During the fiscal year ended
December 31, 2008 and 2007, Eisner LLP, our
principal accountant for 2007, billed fees
of $10,000 and $168,000, respectively for
the services they performed throughout
those years, including audit work performed
in connection with the preparation of our
financial statements included in our Annual
Report on Form 10-K for the fiscal year
ended December 31, 2007, a review of our
financial statements included in our Form
10-Qs during 2007 and a review of our
financial statements included in the
Registration Statement on Form S-4, as
amended, filed on November 8, 2007.(2)
    
    During 2008 and 2007, neither SingerLewak
nor Eisner rendered assurance and related
services reasonably related to the
performance of the audit or review of
financial statements and, consequently, did
not bill the Company for any audit-related
fees.(3)
    
    During 2008 and 2007, neither SingerLewak
nor Eisner rendered services to us for tax
compliance, tax advice and tax planning
and, consequently, did not bill the Company
for any tax fees.(4)
    
    During 2008 and 2007, there were no fees
billed for products and services provided
by SingerLewak or Eisner other than those
set forth above. PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
  20




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
 31.1
    
    Section 302 Certification from Gene E. Burleson31.2
    
    Section 302 Certification from Harry L. Zimmerman
 21




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SIGNATURES
  PET DRX CORPORATIONDate: April 30, 2009By:
    /s/ Gene E. BurlesonGene E. BurlesonChairman of the Board and Chief Executive
Officer 22




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EXHIBIT INDEX
  ExhibitNo.
    
    Description31.1 *
    
    Section 302 Certification from Gene E. Burleson31.2 *
    
    Section 302 Certification from Harry L. Zimmerman
 23