##### Table of Contents



UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from 
to
 Commission File Number 1-3473
 PET DRX CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    56-2517815(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)215 Centerview Drive, Suite 360
Brentwood, Tennessee
    
    37027(Address of principal executive offices)
    
    (Zip Code)
 (615) 369-1914  (Registrants telephone number, including area code)
 þ o
 o þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



INDEX
 PagePart I. Financial Information.Item 1. Financial StatementsCondensed Consolidated Balance Sheets
as of March 31, 2010 and December 31, 2009
    
    
    1Condensed Consolidated Statements of
Operations for the three months ended March 31,
2010 and 2009
    
    
    2Condensed Consolidated Statements of
Cash Flows for the three months ended March 31,
2010 and 2009
    
    
    3Notes to Condensed Consolidated Financial
Statements
    
    
    4Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About
Market Risk
    
    
    17Item 4. Controls and
Procedures
    
    
    18Part II. Other Information.Item 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds
    
    
    18Item 6. Exhibits
    
    
    18EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I: FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements.
 
 PET DRX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and number of shares)
 March 31,2010
    
    
    December 31,(unaudited)
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    2,907
    
    
    $
    2,650Trade accounts receivable, net
    
    
    372
    
    
    
    385Inventory, net
    
    
    881
    
    
    
    901Prepaid expenses and other
    
    
    1,314
    
    
    
    1,155Total current assets
    
    
    5,474
    
    
    
    5,091Property and equipment, net
    
    
    4,497
    
    
    
    6,306Other assets:Goodwill
    
    
    26,525
    
    
    
    26,525Other intangible assets, net
    
    
    5,413
    
    
    
    5,663Restricted cash
    
    
    425
    
    
    
    425Other
    
    
    300
    
    
    
    290Total assets
    
    $
    42,634
    
    
    $
    44,300LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current portion of long-term obligations, net of debt discount
    
    $
    4,334
    
    
    $
    2,853Accounts payable
    
    
    1,663
    
    
    
    1,583Accrued payroll and other expenses
    
    
    4,308
    
    
    
    4,740Obligations under capital leases, current portion
    
    
    285
    
    
    
    320Deferred rent, current portion
    
    
    10
    
    
    
    9Total current liabilities
    
    
    10,600
    
    
    
    9,505Long-term liabilities:Convertible debt, less current portion, net of debt discount
    
    
    10,689
    
    
    
    11,257Term notes, less current portion
    
    
    1,510
    
    
    
    1,726Warrant liabilities
    
    
    3,684
    
    
    
    2,914Obligations under capital leases, less current portion
    
    
    315
    
    
    
    369Deferred rent, less current portion
    
    
    591
    
    
    
    549Total long term liabilities
    
    
    16,789
    
    
    
    16,815Total liabilities
    
    
    27,389
    
    
    
    26,320Stockholders equity:Common stock, par value $0.0001, 90,000,000 shares authorized
and 23,714,460 outstanding as of March 31, 2010 and December
31, 2009, respectively, net of treasury shares of 1,361,574
at March 31, 2010 and December 31, 2009, respectively
    
    
    2
    
    
    
    2Additional paid-in-capital
    
    
    86,429
    
    
    
    86,345Accumulated deficit
    
    
    (71,186
    )
    
    
    (68,367
    )Total stockholders equity
    
    
    15,245
    
    
    
    17,980Total liabilities and stockholders equity
    
    $
    42,634
    
    
    $
    44,300
 See Notes to Condensed Consolidated Financial Statements
 1




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##### Table of Contents



PET DRX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Revenue
    
    $
    15,709
    
    
    $
    16,722Direct costs
    
    
    14,411
    
    
    
    15,039Hospital contribution
    
    
    1,298
    
    
    
    1,683Selling, general, and administrative expenses
    
    
    1,838
    
    
    
    2,340Loss from operations
    
    
    (540
    )
    
    
    (657
    )Other income (expense)Gain/(loss) on change in fair value of warrant liabilities
    
    
    (770
    )
    
    
    1,972Interest income
    
    
    1
    
    
    
    2Interest expense
    
    
    (1,480
    )
    
    
    (1,333
    )Loss before provision for income taxes
    
    
    (2,789
    )
    
    
    (16
    )Provision for income taxes
    
    
    30
    
    
    
    5Net loss
    
    $
    (2,819
    )
    
    $
    (21
    )Basic and diluted loss per common share
    
    $
    (0.12
    )
    
    $
    (0.00
    )Shares used for computing basic and diluted loss per share
    
    
    23,714
    
    
    
    23,660
 See Notes to Condensed Consolidated Financial Statements
 2




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##### Table of Contents



PET DRX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Cash flows used in operating activities:Net loss
    
    $
    (2,819
    )
    
    $
    (21
    )Adjustments to reconcile net loss to net cash used in operating
activities:Depreciation and amortization
    
    
    993
    
    
    
    678Amortization of debt discount
    
    
    1,032
    
    
    
    953(Gain)/loss on change in fair value of warrant liabilities
    
    
    770
    
    
    
    (1,972
    )Paid-in-kind interest on loans
    
    
    217
    
    
    
    118Share-based compensation
    
    
    84
    
    
    
    171Deferred rent
    
    
    43
    
    
    
    55Other
    
    
    (10
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    13
    
    
    
    (21
    )Inventory
    
    
    20
    
    
    
    45Prepaid expenses and other
    
    
    (159
    )
    
    
    263Accounts payable
    
    
    80
    
    
    
    176Accrued payroll and other expenses
    
    
    (432
    )
    
    
    (1,606
    )Other
    
    
    
    
    
    
    5Net cash used in operating activities
    
    
    (168
    )
    
    
    (1,156
    )Cash flows provided by/(used in) investing activities:Property and equipment additions
    
    
    (72
    )
    
    
    (89
    )Proceeds from sale of Yucca building
    
    
    1,150
    
    
    
    Net cash provided by/(used in) investing activities
    
    
    1,078
    
    
    
    (89
    )Cash flow (used in)/provided by financing activities:Payment of debt waiver fees
    
    
    
    
    
    
    (100
    )Payment of debt financing costs
    
    
    
    
    
    
    (307
    )Deferral of legal settlement to term loan
    
    
    
    
    
    
    131Payments on notes payable
    
    
    (564
    )
    
    
    (549
    )Payments on capital lease obligations
    
    
    (89
    )
    
    
    (55
    )Net proceeds from 12% secured convertible notes
    
    
    
    
    
    
    6,475Net cash (used in)/provided by financing activities
    
    
    (653
    )
    
    
    5,595Increase in cash and cash equivalents
    
    
    257
    
    
    
    4,350Consolidated cash and cash equivalents at beginning of period
    
    
    2,650
    
    
    
    1,723Consolidated cash and cash equivalents at end of period
    
    $
    2,907
    
    
    $
    6,073Supplemental disclosures:Cash paid during the period for:Income taxes
    
    $
    
    
    
    $
    Interest
    
    $
    165
    
    
    $
    274Schedule of non-cash investing and financing activities:Retirement of debt to offset related party receivable
    
    $
    
    
    
    $
    30Common stock warrants issued as payment of offering costs
    
    $
    
    
    
    $
    4,374Property acquired with note payable
    
    $
    12
    
    
    $
    
 See Notes to Condensed Consolidated Financial Statements
 3




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##### Table of Contents



PET DRX CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
   2. New Accounting Pronouncements
 Adopted
     4




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Issued
    3. Goodwill and Other Intangible Assets
   As of March 31, 2010
    
    
    As of December 31, 2009Gross
    
    
    Accumulated
    
    
    Net
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    NetCarrying Amount
    
    
    Amortization
    
    
    Carrying Amount
    
    
    Amount
    
    
    Amortization
    
    
    Carrying AmountCovenants not-to-compete
    
    $
    684
    
    
    $
    (516
    )
    
    $
    168
    
    
    $
    684
    
    
    $
    (478
    )
    
    $
    206Non-contractual customer
relationships
    
    
    8,118
    
    
    
    (2,873
    )
    
    
    5,245
    
    
    
    8,118
    
    
    
    (2,661
    )
    
    
    5,457Total
    
    $
    8,802
    
    
    $
    (3,389
    )
    
    $
    5,413
    
    
    $
    8,802
    
    
    $
    (3,139
    )
    
    $
    5,663
 5




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##### Table of Contents



Remainder of 2010
    
    $
    7352011
    
    
    8912012
    
    
    7892013
    
    
    7162014
    
    
    657Thereafter
    
    
    1,625Total
    
    $
    5,413
 4. Property and Equipment, net
  March 31,
    
    
    December 31,2010
    
    
    2009Buildings
    
    $
    930
    
    
    $
    2,787Leasehold improvements
    
    
    1,047
    
    
    
    1,047Equipment
    
    
    3,937
    
    
    
    3,872Furniture and equipment
    
    
    606
    
    
    
    606Computer equipment & software
    
    
    2,359
    
    
    
    2,357Construction-in-progress
    
    
    53
    
    
    
    37Total property and equipment
    
    
    8,932
    
    
    
    10,706Less-accumulated depreciation and amortization
    
    
    (4,435
    )
    
    
    (4,400
    )Total property and equipment, net
    
    $
    4,497
    
    
    $
    6,306
   5. Long-Term Obligations
  6




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##### Table of Contents



March 31,
    
    December 31,2010
    
    2009Convertible notes
    
    Convertible notes payable, maturing from
2010 to 2014, secured by substantially all
of the Companys assets, various interest
rates ranging from 7.0% to 12.5% (net of
debt discounts of $3.2 million and $3.5
million) at March 31, 2010 and December 31,
2009, respectively.
    
    $
    12,712
    
    
    $
    11,464Promissory notes
    
    Notes payable, maturing from 2010 to
2013, secured by assets and stock of
certain subsidiaries, various interest rates
ranging from 6.5% to 12.0%
    
    
    3,640
    
    
    
    4,100Earn-out notes
    
    Notes payable, various maturities through
2010, interest rates ranging from none
to 8.0%
    
    
    182
    
    
    
    272Total debt obligations
    
    
    16,534
    
    
    
    15,836Less-current portion, net of debt discount
    
    
    (4,334
    )
    
    
    (2,853
    )Long-term portion
    
    $
    12,200
    
    
    $
    12,983
  Remainder of 2010
    
    $
    3,3462011
    
    
    4,1652012
    
    
    6122013
    
    
    19,5492014
    
    
    585Total
    
    $
    28,257
  12% Senior Secured Convertible Notes
  Amendment to Convertible Note
 nd nd nd nd
 7




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##### Table of Contents



6. Stockholders Equity
  Common Stock Warrants
   Number ofCommon
    
    
    WeightedStock
    
    
    AverageWarrants
    
    
    PriceOutstanding, December 31, 2009
    
    
    23,870,685
    
    
    $
    2.11Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Cancelled
    
    
    (7,645,833
    )1
    
    $
    6.00Outstanding and exercisable, March 31, 2010
    
    
    16,224,852
    
    
    $
    0.28
 
 (1)
    
    On March 17, 2010, these warrants expired by their terms and are no longer
deemed outstanding.  RemainingContractualWarrants
    
    LifeExercise Price
    
    Outstanding
    
    (years)$0.00
    
    
    11,796
    
    
    
    7.13$0.10
    
    
    15,320,986
    
    
    
    5.83$2.72
    
    
    89,845
    
    
    
    5.58$3.11
    
    
    740,160
    
    
    
    5.83$6.16
    
    
    62,065
    
    
    
    7.5816,224,852
 7. Calculation of Loss Per Common Share
   8




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##### Table of Contents



Three Months EndedMarch 31,2010
    
    
    2009Convertible debenture notes, if converted to common stock
    
    
    2,654
    
    
    
    731Warrants for common stock
    
    
    16,225
    
    
    
    23,872Options for common stock
    
    
    3,606
    
    
    
    3,480Total
    
    
    22,485
    
    
    
    28,083
   Three Months EndedMarch 31,2010
    
    
    2009Net loss
    
    
    (2,819
    )
    
    
    (21
    )Weighted average common shares outstanding:Basic
    
    
    23,714
    
    
    
    23,660Effect of dilutive common stock equivalents
    
    
    
    
    
    
    Diluted
    
    
    23,714
    
    
    
    23,660Basic and diluted net loss per common share
    
    $
    (0.12
    )
    
    $
    (0.00
    )
 8. Share-Based Compensation
   Three Months EndedMarch 31,2010
    
    
    2009Direct costs
    
    $
    7
    
    
    $
    10Selling, general and administrative expenses
    
    
    77
    
    
    
    161Total
    
    $
    84
    
    
    $
    171
 Stock Option Activity
  9




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##### Table of Contents



WeightedStock
    
    
    
    
    
    
    
    
    
    
    
    AverageOptions
    
    
    
    
    
    
    Weighted
    
    
    
    RemainingAvailable
    
    
    
    
    
    
    Average
    
    
    Contractual
    
    
    Aggregatefor
    
    
    Stock Options
    
    
    Exercise
    
    
    Life
    
    
    IntrinsicGrant
    
    
    Outstanding
    
    
    Price
    
    
    (years)
    
    
    ValueBalance as of December 31, 2009
    
    
    2,890
    
    
    
    3,205
    
    
    $
    2.05
    
    
    
    
    
    
    $
    Granted
    
    
    (425
    )
    
    
    425
    
    
    
    0.40Exercised
    
    
    
    
    
    
    
    
    
    
    Forfeited or canceled
    
    
    24
    
    
    
    (24
    )
    
    
    0.35Balance as of March 31, 2010
    
    
    2,489
    
    
    
    3,606
    
    
    $
    1.86
    
    
    
    8.51
    
    
    $
    161Vested at March 31, 2010
    
    
    
    
    
    
    3,581
    
    
    $
    1.87
    
    
    
    8.51
    
    
    $
    161Exercisable at March 31, 2010
    
    
    
    
    
    
    2,086
    
    
    $
    2.38
    
    
    
    8.25
    
    
    $
    99
  Number



    Weighted







    NumberOutstanding

    
    
    Average
    
    
    Weighted

    
    
    Exercisable
    
    
    WeightedAs of
    
    
    Remaining
    
    
    Average

    
    
    As of
    
    
    AverageMarch 31,
    
    
    Contractual
    
    
    Exercise
    
    
    March 31,
    
    
    ExerciseRange of Exercise Price
    
    
    2010
    
    
    Life (years)
    
    
    Price
    
    
    2010
    
    
    Price$0.20
    
    $
    0.20
    
    
    
    976
    
    
    
    8.96
    
    
    $
    0.20
    
    
    
    653
    
    
    $
    0.20$0.28
    
    $
    0.40
    
    
    
    943
    
    
    
    9.46
    
    
    $
    0.34
    
    
    
    161
    
    
    $
    0.29$0.50
    
    $
    1.00
    
    
    
    770
    
    
    
    8.69
    
    
    $
    0.88
    
    
    
    570
    
    
    $
    0.84$2.50
    
    $
    6.50
    
    
    
    859
    
    
    
    6.85
    
    
    $
    5.98
    
    
    
    663
    
    
    $
    6.10$6.70
    
    $
    6.70
    
    
    
    58
    
    
    
    7.78
    
    
    $
    6.70
    
    
    
    39
    
    
    $
    6.70$0.20
    
    $
    6.70
    
    
    
    3,606
    
    
    
    8.51
    
    
    $
    1.86
    
    
    
    2,086
    
    
    $
    2.38
  Calculation of Fair Value
   March 31,
    
    
    December 31,2010
    
    
    2009Weighted- average volatility (1)
    
    
    29.0
    %
    
    
    44.5
    %Expected dividends
    
    
    0.0
    %
    
    
    0.0
    %Expected term  employees (2)
    
    4.0 years
    
    
    4.7 yearsRisk-free rate  employees (3)
    
    
    1.9
    %
    
    
    2.6%-3.3
    %
 10




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##### Table of Contents



(1)
    
    In 2009 and 2010, we estimated the volatility of our
common stock on the valuation date based on
historical volatility of the common stock of a peer
group of public companies as the Company has limited
stock price history and it would not be practical to
use internal volatility.(2)
    
    The expected term represents the period of time that
we expect the options to be outstanding. We estimate
the expected term for employees based on the
simplified method. The expected term presented for
nonemployees is based upon the option expiration date
at the date of grant. 9. Fair Value
       10. Contingencies
  11. Warrant Liabilities
  11




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##### Table of Contents



December 31, 2009
    
    $
    2,914Mark-to-market adjustment to fair value at March 31, 2010
    
    
    770March 31, 2010
    
    $
    3,684
  March 31, 2010
    
    
    December 31, 2009Weighted- average volatility (1)
    
    
    28.9
    %
    
    
    29.9
    %Expected dividends
    
    
    0.0
    %
    
    
    0.0
    %Expected term (2)
    
    2.8-7.6 years

    
    3.0-7.8 yearsRisk-free rate (3)
    
    
    1.5%-3.4
    %
    
    
    1.7%-3.5
    %
 
 (1)
    
    We estimated the volatility of our common stock on the valuation date based on historical
volatility of the common stock of a peer group of public companies as the Company has
limited stock price history and it would not be practical to use internal volatility.(2)
    
    The expected term represents the period of time that we expect the options to be outstanding.(3)
    
    The risk-free interest rate is based on the implied yield in effect on U.S. Treasury
zero-coupon issues with equivalent remaining terms. 12. Subsequent Events
  
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
 The following discussion should be read in conjunction with our condensed consolidated
financial statements and notes thereto provided under Part I, Item 1 of this Quarterly Report on
Form 10-Q (the Form 10-Q). The Companys disclosure and analysis in this Form 10-Q contain some
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995 that set forth anticipated results based on managements plans and assumptions. From time to
time, the Company also provides forward-looking statements in other materials it releases to the
public, as well as oral forward-looking statements. Such statements give the Companys current
expectations or forecasts of future events; they do not relate strictly to historical or current
facts. The Company has tried, wherever possible, to identify such statements by using words such as
anticipate, estimate, expect, project, intend, plan, believe, will, target,
forecast and similar expressions in connection with any discussion of future operating or
financial performance or business plans or prospects. In particular, these include statements
relating to future actions, business plans and prospects, future performance or results of current
and anticipated services, sales efforts, expenses, interest rates, the outcome of contingencies,
such as legal proceedings, and financial results.
 12




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The Company cannot guarantee that any forward-looking statement will be realized. Achievement
of future results is subject to risks, uncertainties and potentially inaccurate assumptions. Should
known or unknown risks or uncertainties materialize, or should underlying assumptions prove
inaccurate, actual results could differ materially from past results and those anticipated,
estimated or projected. Investors should keep this in mind as they consider forward-looking
statements. Factors that may cause our plans, expectations, future financial condition and results
to change are described under the heading Risk Factors in Item 1A of our Annual Report on Form
10-K for the year ended December 31, 2009 filed with the SEC on March 31, 2010.
 The forward-looking information set forth in this Quarterly Report on Form 10-Q is as of the
date of this report, and the Company undertakes no obligation to publicly update forward-looking
statements, whether as a result of new information, future events or otherwise. Investors are
advised, however, to consult any further disclosures the Company makes on related subjects in its
reports to the SEC filed after the date hereof at the SECs website at www.sec.gov
 Overview
 General
    Business Strategy
  
    
    recruit and retain top veterinary professionals;
 
    
    provide high quality veterinary care to our customers;
 
    
    increase veterinary hospital visits through advertising, market positioning, consumer
education, wellness programs and branding;
 
    
    increase veterinary hospital margins through same-store revenue growth and cost savings
realized through consolidated purchasing arrangements for high volume items such as food
and medical supplies and generally lower costs through economies of scale;
 
    
    increase veterinary hospital productivity through professional development and training,
integration of performance data collection systems, application of productivity standards
to previously under-managed operations and removal of administrative burdens from
veterinary professionals;
 13




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##### Table of Contents




    
    pursue acquisitions of additional veterinary hospitals, with a focus on continuing to
develop hub and spoke networks that will improve customer service; and
    
    capture valuation arbitrage differentials between individual practice value and larger
consolidated enterprise value.
 Seasonality
  Overview of Our Financial Results
 (Amounts relate to continuing operations unless otherwise note)
     14




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##### Table of Contents



Results of Our Operations
 Three Months Ended March 31, 2010 and 2009
 (In millions, except percentages)
 Revenue
 For The Three Months endedMarch 31,
    
    

    %2010
    
    2009
    
    ChangeRevenue
    
    $
    15.7
    
    
    $
    16.7
    
    
    
    (6.1)
    %
  Direct Costs
 For The Three Months endedMarch 31,
    
    
    %2010
    
    2009
    
    ChangeTotal direct costs
    
    $
    14.4
    
    
    $
    15.0
    
    
    
    (4.2)
    %Hospital Contribution Margin as a percentage of total net revenue
    
    
    8.3
    %
    
    
    10.1
    %
   Selling, General and Administrative (SG&A)
 For The Three Months endedMarch 31,
    
    %2010
    
    2009
    
    ChangeSelling, general and administrative
    
    $
    1.8
    
    
    $
    2.3
    
    
    
    (21.5)
    %As a percentage of total net revenue
    
    
    11.7
    %
    
    
    14.0
    %
 15




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##### Table of Contents



Interest Expense
 For The Three Months endedMarch 31,
    
    %2010
    
    2009
    
    ChangeInterest expense
    
    $
    1.5
    
    
    $
    1.3
    
    
    
    11.0
    %As a percentage of total net revenue
    
    
    9.4
    %
    
    
    8.0
    %
  Liquidity and Capital Resources
  Cash Flows from Operating Activities
   Cash Flows from Investing Activities
  16




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##### Table of Contents



Cash Flows from Financing Activities
  Other Metrics
   March 31,
    
    
    March 31,2010
    
    
    2009Net loss
    
    $
    (2,819
    )
    
    $
    (21
    )Depreciation
    
    
    743
    
    
    
    412Amortization
    
    
    250
    
    
    
    266Gain/(loss) on change in fair value of warrant liabilities
    
    
    770
    
    
    
    (1,972
    )Interest expense, net
    
    
    1,479
    
    
    
    1,333Income taxes
    
    
    30
    
    
    
    5Adjusted EBITDA
    
    $
    453
    
    
    $
    23
   March 31,
    
    
    March 31,2010
    
    
    2009Hospital contribution
    
    $
    1,298
    
    
    $
    1,683Depreciation at hospitals
    
    
    325
    
    
    
    325Amortization at hospitals
    
    
    250
    
    
    
    266Hospital EBITDA
    
    $
    1,873
    
    
    $
    2,274
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  17




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##### Table of Contents



Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II: OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 6. Exhibits.
 Exhibit No.
    
    Description31.1*
    
    Section 302 Certification from Gene E. Burleson.31.2*
    
    Section 302 Certification from Harry L. Zimmerman.32.1*
    
    Section 906 Certification from Gene E. Burleson.32.2*
    
    Section 906 Certification from Harry L. Zimmerman.
 
 *
    
    Filed or furnished herewith. 18




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##### Table of Contents



SIGNATURES
  PET DRX CORPORATIONDate: May 14, 2010
    By:
    /s/ Harry L. ZimmermanHarry L. ZimmermanExecutive Vice President and Chief Financial Officer 19




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1*
    
    Section 302 Certification from Gene E. Burleson.31.2*
    
    Section 302 Certification from Harry L. Zimmerman.32.1*
    
    Section 906 Certification from Gene E. Burleson.32.2*
    
    Section 906 Certification from Harry L. Zimmerman.
 
 *
    
    Filed or furnished herewith. 20