======================================================================

                          UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                            FORM 10-K

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

            For the fiscal year ended March 31, 2007

                            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           (IRS Employer
 incorporation or organization)          Identification No.)


    1441 S.W. 29th Avenue, Pompano Beach, Florida     33069
----------------------------------------------------------------------
      (Address of principal executive offices)      (Zip Code)

 Registrant's telephone number, including area code: (954) 979-5995
                                                    ------------------

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

      Title of each class        Name of each exchange on which registered
      -------------------        -----------------------------------------

COMMON STOCK, $.001 PAR VALUE         The NASDAQ Stock Market LLC
                                     (NASDAQ Global Select Market)

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

                               NONE
        ________________________________________________

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

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

Indicate by check mark whether the registrant (1) has  filed
all  reports required to be filed by Section 13 or 15(d)  of
the Securities Exchange Act of 1934 during the preceding  12
months  (or for such shorter period that the registrant  was
required to file such reports), and (2) has been subject  to
such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate  by  check mark if disclosure of delinquent  filers
pursuant  to  Item  405 of Regulation S-K is  not  contained
herein,   and  will  not  be  contained,  to  the  best   of
Registrant's  knowledge, in definitive proxy or  information
statements  incorporated by reference in Part  III  of  this
Form 10-K or any amendment to this Form 10-K.  [X]

Indicate  by check mark whether the registrant  is  a  large
accelerated  filer,  an  accelerated  filer,   or   a   non-
accelerated filer.  See definition of "accelerated filer" or
"large accelerated filer" in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]

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

The  aggregate market value of the common stock held by non-
affiliates of the registrant as of September 30,  2006,  the
last   business  day  of  the  registrant's  most   recently
completed second fiscal quarter, was $240,377,000  based  on
the closing sales price for the Registrant's Common Stock on
that date, as reported on the NASDAQ Global Select Market.

The  number  of  shares  of  the Registrant's  Common  Stock
outstanding as of June 1, 2007 was 24,335,781.

               DOCUMENTS INCORPORATED BY REFERENCE

  Information  to  be  set  forth  in  our  Proxy  Statement
relating  to our 2007 Annual Meeting of Stockholders  to  be
held on August 3, 2007 is incorporated by reference in Items
10, 11, 12, 13, and 14 of Part III of this report.


<PAGE>


                      PETMED EXPRESS, INC.

                 2007 Annual Report on Form 10-K

                        TABLE OF CONTENTS

                                                                        Page
                                                                        ----
PART I....................................................................1
 Item 1.  Business........................................................1
 Item 1A. Risk Factors....................................................5
 Item 1B. Unresolved Staff Comments.......................................9
 Item 2.  Properties......................................................9
 Item 3.  Legal Proceedings..............................................10
 Item 4.  Submission of Matters to a Vote of Security Holders............10
PART II..................................................................11
 Item 5.  Market for Registrant's Common Equity, Related Stockholder
            Matters and Issuer Purchases of Equity Securities............11
 Item 6.  Selected Financial Data........................................13
 Item 7.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations....................................14
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.....21
 Item 8.  Financial Statements and Supplementary Data....................22
 Item 9.  Changes in and Disagreements With Accountants
            on Accounting and Financial Disclosure.......................41
 Item 9A. Controls and Procedures........................................41
 Item 9B. Other Information..............................................41
PART III.................................................................42
 Item 10. Directors, Executive Officers, and Corporate Governance........42
 Item 11. Executive Compensation.........................................42
 Item 12. Security Ownership of Certain Beneficial Owners
            and Management and Related Stockholder Matters...............42
 Item 13. Certain Relationships and Related Transactions,
            and Director Independence....................................42
 Item 14. Principal Accounting Fees and Services.........................42
PART IV..................................................................43
 Item 15. Exhibits, Financial Statement Schedules........................43
SIGNATURES...............................................................45


















<PAGE>





                             PART I

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

  Certain  information in this Annual Report  on  Form  10-K
includes  forward-looking statements within the  meaning  of
Section  27A  of the Securities Act of 1933 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,"   "plan,"
"projects,"     "contemplates,"    "intends,"     "budgets,"
"predicts,"   "estimates,"   "anticipates,"    or    similar
expressions.  These statements are based on our beliefs,  as
well  as  assumptions  we have used based  upon  information
currently   available  to  us.   Because  these   statements
reflect  our  current views concerning future events,  these
statements  involve  risks, uncertainties  and  assumptions.
Actual  future  results  may differ significantly  from  the
results  discussed  in  the forward-looking  statements.   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  Annual
Report.

  When  used  in  this Annual Report on Form  10-K,  "PetMed
Express,"  "1-800-PetMeds," "PetMed," "PetMed  Express.com,"
"the  Company,"   "we,"  "our," and  "us"  refer  to  PetMed
Express, Inc. and our subsidiaries.

ITEM 1. BUSINESS

General

  PetMed   Express,  Inc.  and  subsidiaries,  d/b/a  1-800-
PetMeds, is a leading nationwide pet pharmacy.  The  Company
markets  prescription and non-prescription pet  medications,
and  other health products for dogs, cats, and horses 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, increase traffic on its website  at
www.1800petmeds.com,  acquire new  customers,  and  maximize
-------------------
repeat  purchases.  Our fiscal year end  is  March  31,  our
executive  offices  are located at 1441  S.W.  29th  Avenue,
Pompano  Beach, Florida 33069, and our telephone  number  is
(954)  979-5995.  The information contained on the Company's
website is not part of our Annual Report.

Our Products

  We  offer  a  broad selection of products for dogs,  cats,
and  horses.  These products include a majority of the well-
known  brands  of  medication, such as Frontline  Plusr,  K9
Advantixr,    Advantager,   Heartgard   Plusr,    Sentinelr,
Interceptorr,   Programr,   Revolutionr,   Deramaxxr,    and
Rimadylr.   Generally, our prices are competitive  with  the
prices   for   medications  charged  by  veterinarians   and
retailers.

  We   research  new  products,  and  regularly  select  new
products  or  the latest generation of existing products  to
become part of our product selection.  In addition, we  also
refine our current products to respond to changing consumer-
purchasing habits.  Our website is designed to give  us  the
flexibility to change featured products or promotions.   Our
product  line  provides customers with  a  wide  variety  of
selections  across  the most popular health  categories  for
dogs, cats, and horses.  Our current products include:

  Non-Prescription Medications (OTC): Flea and tick  control
  products,  bone  and  joint care  products,  vitamins  and
  nutritional supplements, and hygiene products.

  Prescription   Medications  (Rx):  Heartworm   treatments,
  thyroid and arthritis medications, antibiotics, and  other
  specialty medications, as well as generic substitutes.







                                  1
<PAGE>


Sales

  The   following   table  provides  a  breakdown   of   the
percentage  of our total sales by each category  during  the
indicated periods:
<TABLE>
<CAPTION>

                                         Year Ended March 31,
                                        2007    2006     2005
                                       ------  ------   ------
<S>                                    <C>     <C>      <C>
Non-prescription medications             70%     70%      69%
Prescription medications                 29%     29%      30%
Shipping and handling charges and other   1%      1%       1%
                                       ------  ------   ------
Total                                   100%    100%     100%
                                       ======  ======   ======
</TABLE>

We  offer  our  products through three main sales  channels:
Internet  through  our  website,  telephone  contact  center
through  our toll-free number, and direct mail/print through
the  1-800-PetMeds catalog and postcards.  We have  designed
both  our catalog and website to provide a convenient, cost-
effective   and   informative   shopping   experience   that
encourages  consumers to purchase products important  for  a
pet's  health  and quality of life.  We believe  that  these
multiple channels allow us to increase the visibility of our
brand  name  and  provide customers with increased  shopping
flexibility and service.

Internet

   We  seek to combine our product selection and pet  health
information  with  the  shopping ease  of  the  Internet  to
deliver  a  convenient and personalized shopping experience.
Our website offers health and nutritional product selections
for  dogs,  cats,  and  horses, and relevant  editorial  and
easily obtainable or retrievable resource information.  From
our home page, customers can search our website for products
and  access resources on a variety of information  on  dogs,
cats,  and  horses.  Customers can shop at  our  website  by
category,  product line or individual product.  We attracted
approximately  14  million visitors to  our  website  during
fiscal  year 2007, approximately 9% of those visitors placed
an order, and our website generated approximately 62% of our
total sales for the same time period.

  In  February  2006, we began sponsorship of a new  website
called     "PetHealth101"    which     is     located     at
www.PetHealth101.com.  In  PetHealth101,  pet  owners   have
--------------------
access  to  health information covering pets'  behavior  and
illnesses-and  to  the  natural and pharmaceutical  remedies
specifically for a pet's problems. PetHealth101  is  updated
with the latest research for pet owners.

Telephone Contact Center

  Our  customer  care  representatives receive  and  process
inbound  customer  calls, facilitate our outbound  campaigns
around  maximizing customers' reorders, facilitate our  live
web  chat,  and  process  customer e-mails.   Our  telephone
system  is  equipped with certain features including  pop-up
screens  and  call blending capabilities that  give  us  the
ability   to   efficiently   utilize   our   customer   care
representatives'  time, providing excellent  customer  care,
service,  and  support.  Our customer  care  representatives
receive a base salary and are rewarded with commissions  for
sales,  and  bonuses and other awards for achieving  certain
goals.

Direct Mail/Print

  The  1-800-PetMeds  catalog is a full-color  catalog  that
features our most popular products.  The catalog is produced
by  a  combination of in-house writers, production  artists,
and independent contractors.  We mail catalogs and postcards
in  response to requests generated from our advertising  and
as part of direct mail campaigns to our customers.

Our Customers

  Approximately 1,900,000 customers have purchased  from  us
within  the  last  two  years.  We  attracted  approximately
681,000  and 624,000 new customers in fiscal 2007 and  2006,
respectively.   Our  customers are  located  throughout  the
United  States, with approximately 50% of customers residing
in  California, Florida, Texas, New York, Pennsylvania,  New
Jersey, and Virginia.

  While  our primary focus has been on retail customers,  we
have   also   sold   various  non-prescription   medications
wholesale to a variety of businesses, including pet  stores,
groomers  and  traditional retailers in the  United  States.
For  the  fiscal year ended March 31, 2007, the majority  of
our sales were made to retail customers with less than 1% of
our  sales made to wholesale customers.  The average  retail
purchase  was approximately $79 for fiscal 2007 compared  to
$77 for fiscal 2006.


                                  2
<PAGE>


Marketing

  The  goal  of  our marketing strategy is  to  build  brand
recognition,  increase customer traffic, add new  customers,
build  strong  customer  loyalty,  maximize  reorders,   and
develop  incremental  revenue  opportunities.   We  have  an
integrated   marketing  campaign  that  includes  television
advertising,  direct  mail/print  and  e-mail,  and   online
marketing.

Television Advertising

  Our  television  advertising is designed  to  build  brand
equity,   create  brand  awareness,  and  generate   initial
purchases  of  products via the telephone and the  Internet.
We  have  used :30 and :15 second television commercials  to
attract  new  customer  orders.  Our television  commercials
typically  focus  on  our  ability  to  rapidly  deliver  to
customers the same medications offered by veterinarians, but
at  reduced  prices.  We generally purchase  advertising  on
national  cable  channels  to  target  our  key  demographic
groups.    We   believe  that  television   advertising   is
particularly  effective and instrumental in  building  brand
awareness.

  In  January  2007, we began featuring Betty White  in  our
new  2007 advertising campaign, including in new commercials
airing nationally.  Ms. White speaks to pet owners from  her
home  about  the  savings and convenience of purchasing  the
same  exact pet medications from 1-800-PetMeds, compared  to
purchasing the medications from a veterinarian.

Direct Mail/Print and E-mail

  We  use  direct  mail/print  and  e-mail  to  acquire  new
customers and to remind our existing customers to reorder.

Online Marketing

  We  supplement  our  traditional advertising  with  online
advertising  and  marketing  efforts.   We  make  our  brand
available  to  internet  consumers  by  purchasing  targeted
keywords and achieving prominent placement on the top search
engines   and  search  engine  networks,  including  Google,
Microsoft  Network, and Yahoo.  We are also members  of  the
LinkShare  Network,  which  is  an  affiliate  program  with
merchant  clients and affiliate websites.  This  network  is
designed to develop and build a long-term, branded affiliate
program  in order to increase online sales and establish  an
Internet  presence.   The LinkShare Network  enables  us  to
establish link arrangements with other websites, as well  as
with portals and search engines.

Operations

Purchasing

  We  purchase  our  products from  a  variety  of  sources,
including certain manufacturers, domestic distributors,  and
wholesalers.   We have multiple suppliers for  each  of  our
products  to  obtain  the  lowest  cost.   We  purchase  the
majority  of our health and nutritional supplements directly
from  manufacturers.  We believe having strong relationships
with  product manufacturers will ensure the availability  of
an adequate volume of products ordered by our customers, and
will   enable   us  to  provide  more  and  better   product
information.   Historically,  substantially  all  the  major
manufacturers    of    prescription   and   non-prescription
medications have declined to sell these products  to  direct
marketing  companies.   (See Risk  Factors.)   Part  of  our
growth  strategy  includes developing  direct  relationships
with  the  leading pharmaceutical manufacturers of the  more
popular prescription and non-prescription medications.

Order Processing

  We  provide our customers with toll-free telephone  access
to  our  customer  care representatives.   Our  call  center
generally  operates from 8:00 AM to 11:00 PM Monday  through
Thursday, 8:00 AM to 9:00 PM on Friday, 9:00 AM to  6:00  PM
on  Saturday,  and  10:00 AM to 5:00 PM on  Sunday,  Eastern
Standard Time.  The process of customers purchasing products
from  1-800-PetMeds  consists of  a  few  simple  steps.   A
customer  first  places  a call to our  toll-free  telephone
number or visits our website.  The following information  is
needed   to   process  prescription  orders:   general   pet
information,    prescription    information,     and     the
veterinarian's  name and phone number.  This information  is
entered into our computer system.  Then our pharmacists  and
pharmacy  technicians verify all prescriptions.   The  order
process  system checks for the verification for prescription
medication orders and a valid payment method for all orders.
An  invoice  is  generated and printed  in  our  fulfillment
center, where items are picked for shipping.  The product(s)
in the customer's order are then selected from the Company's
inventory  and  shipped  via United  States  Priority  Mail,
United  Parcel  Service, or Federal Express.  Our  customers
enjoy   the   convenience  of  rapid  home  delivery,   with
approximately  72%  of all orders being  shipped  within  24
hours  of ordering.  Our website allows customers to  easily
browse  and  purchase  substantially  all  of  our  products
online.   Our  website is designed to be fast,  secure,  and
easy  to use with order and shipping confirmations, and with
online order tracking-capabilities.


                                  3
<PAGE>


Warehousing and Shipping

  We  inventory  our products and fill all  customer  orders
from  our  50,000  square foot facility  in  Pompano  Beach,
Florida.   We  have an in-house fulfillment and distribution
operation, which is used to manage the entire supply  chain,
beginning  with  the  placement  of  the  order,  continuing
through  order processing, and then fulfilling and  shipping
of  the  product  to the customer.  We offer  a  variety  of
shipping options, including next day delivery.  We  ship  to
anywhere  in  the United States served by the United  States
Postal  Service, United Parcel Service, or Federal  Express.
Priority  orders  are expedited in our fulfillment  process.
Our goal is to ship the products the same day that the order
is  received.  For prescription medications, our goal is  to
ship the product immediately after the prescription has been
authorized by the customer's veterinarian.

Customer Service and Support

  We  believe  that  a  high level of customer  service  and
support  is critical in retaining and expanding our customer
base.   Customer care representatives participate in ongoing
training  programs  under the supervision  of  our  training
managers.   These  training sessions include  a  variety  of
topics  such as product knowledge, computer usage,  customer
service  tips, and the relationship between our Company  and
veterinarians.  Our customer care representatives respond to
customers'  e-mails  and calls that  are  related  to  order
status,   prices,   and   shipping.    Our   customer   care
representatives also respond to customers through  our  live
web  chat.  If our customer care representatives are  unable
to respond to a customer's inquiry at the time of a call, we
strive to provide an answer within 24 hours.  We believe our
customer  care  representatives are  a  valuable  source  of
feedback  regarding  customer  satisfaction.   Our  customer
returns  and credits average approximately 1.7  %  of  total
sales.

Technology

  We  utilize  integrated technologies in  call  center,  e-
commerce,  order  entry,  and inventory  control/fulfillment
operations.   Our  systems  are  custom  configured  by  the
Company  to optimize our computer telephone integration  and
mail-order processing.  The systems are designed to maintain
a  large  database of specialized information and process  a
large  volume  of  orders efficiently and effectively.   Our
systems   provide   our  agents  with  real   time   product
availability information and updated customer information to
enhance  our  customer service.  We also have an  integrated
direct connection for processing credit cards to ensure that
a  valid  credit  card  number and authorization  have  been
received  at the same time our customer care representatives
are  on  the  phone  with the customer or  when  a  customer
submits  an  order on our website.  Our information  systems
provide  our customer care representatives with  records  of
all  prior contact with a customer, including the customer's
address,   phone   number,  e-mail  address,   fax   number,
prescription  information, order history,  payment  history,
and notes.

Competition

  The  pet  medications  market is  competitive  and  highly
fragmented.    Our  competitors  consist  of  veterinarians,
traditional  retailers,  and  other  mail-order  and  online
retailers of pet medications and other health products.   We
believe  that  the  following are the principal  competitive
factors in our market:

     *  Product  selection and availability, including  the
        availability of  prescription and  non-prescription
        medications;
     *  Brand recognition;
     *  Reliability and speed of delivery;
     *  Personalized service and convenience;
     *  Price; and
     *  Quality of website content.

  We  compete with veterinarians in the sale of prescription
and   non-prescription  pet  medications  and  other  health
products.   Many  pet owners may prefer the  convenience  of
purchasing their pet medications or other health products at
the  time  of  a veterinarian visit, or may be  hesitant  to
offend  their veterinarian by not purchasing these  products
from the veterinarian.  In order to effectively compete with
veterinarians, we must continue to educate pet owners  about
the   service,  convenience,  and  savings  offered  by  our
Company.

  According  to  the  American  Pet  Products  Manufacturers
Association,  pet  spending in the United  States  increased
5.8% to $38.4 billion in 2006.  Pet supplies and medications
represented  $9.3 billion, or 24% of the total  spending  on
pets  in the United States.  The pet medication market  size
is   estimated  to  be  approximately  $3.2  billion,   with
veterinarians having the majority of the market share.   The
dog  and  cat population is approximately 163 million,  with
approximately 63% of all households owning a pet.


                                  4
<PAGE>


  We  believe  that  the following are the main  competitive
strengths   that   differentiate  1-800-PetMeds   from   the
competition:

     *  "1-800-PetMeds" brand name;
     *  Exceptional customer service and support;
     *  Consumer benefit structure of savings and convenience;
     *  Licensed pharmacy to conduct business in 50 states; and
     *  Multiple sources of supply of pet medications.

Intellectual Property

  We  conduct  our  business under the  trade  name  "1-800-
PetMeds."  We believe this name, which is also our toll-free
telephone  number, has added significant  value  and  is  an
important factor in the marketing of our products.  We  have
also   obtained   the   right  to  the  Internet   addresses
www.1800petmeds.com, www.1888petmeds.com, www.petmedexpress.com,
-------------------  -------------------  ---------------------
and www.petmeds.com.   As with  phone numbers,  we  do  not  have
    ---------------
and cannot acquire  any property rights in an  Internet address.
We  do  not  expect  to lose  the  ability to  use the  Internet
addresses; however, there can be no assurance in this regard and
the loss of these addresses may have a material adverse effect on
our financial position and  results  of operations.  We  are the
exclusive owners  of United States  Trademark  Registrations for
"PetMed Express[R],"  "1888PetMeds[R],"  "1-800-PetMeds[R]," and
"PetMeds[R]."

Government Regulation

  Dispensing  prescription medications is  governed  at  the
state  level by the Board of Pharmacy, or similar regulatory
agencies,  of each state where prescription medications  are
dispensed.   We are subject to regulation by  the  State  of
Florida  and are licensed by the Florida Board of  Pharmacy.
Our  current license is valid until February 28,  2009.   We
are  also  licensed  and/or  regulated  by  49  other  state
pharmacy  boards and other regulatory authorities including,
but  not necessarily limited to, the United States Food  and
Drug   Administration   ("FDA")  and   the   United   States
Environmental Protection Agency .  As a licensed pharmacy in
the State of Florida, we are subject to the Florida Pharmacy
Act  and regulations promulgated thereunder.  To the  extent
that  we  are unable to maintain our license as a  community
pharmacy with the Florida Board of Pharmacy, or if we do not
maintain  the  licenses  granted  by  other  state  pharmacy
boards,  or if we become subject to actions by the  FDA,  or
other   enforcement   regulators,   our   distribution    of
prescription  medications to pet owners could  cease,  which
could have a material adverse effect on our operations.

Employees

  We  currently have 216 full time employees, including: 115
in  customer  care  and  marketing; 30  in  fulfillment  and
purchasing; 59 in our pharmacy; 3 in information technology;
4 in administrative positions; and 5 in management.  None of
our  employees are represented by a labor union, or governed
by   any  collective  bargaining  agreements.   We  consider
relations with our employees to be satisfactory.

ITEM 1A. RISK FACTORS

  You  should carefully consider the risks and uncertainties
described  below, and all the other information included  in
this Annual Report before you decide to invest in our common
stock.    Any   of  the  following  risks  could  materially
adversely  affect  our  business,  financial  condition   or
operating  results  and  could result  in  a  loss  of  your
investment.

There  can  be no assurances that we can sustain  profitable
operations in future periods.

  We  reported  net income of $14,444,000, $12,064,000,  and
$8,010,000 for the fiscal years ended March 31, 2007,  2006,
and  2005,  respectively.  Our profitability  during  fiscal
2007  was  due  to increases in our reorder  and  new  order
revenue.   There  are  no assurances  we  will  continue  to
generate revenues at this increased level, or that  we  will
remain  profitable during fiscal 2008 and  beyond.   If  our
operations were to cease being profitable, our liquidity  in
future periods would be adversely affected.


                                  5
<PAGE>


We  may  fail  to  comply  with  various  state  regulations
covering the dispensing of prescription pet medications.  We
could  be  subject  to  reprimands,  sanctions,  probations,
fines,  suspensions,  or the loss of  one  or  more  of  our
pharmacy licenses.

  The  sale and delivery of prescription pet medications  is
generally  governed  by  state laws and  state  regulations.
Since  our pharmacy is located in the State of Florida,  the
Company is governed by the laws and regulations of the State
of  Florida.  Each prescription pet medication sale we  make
is  likely also to be covered by the laws of the state where
the  customer is located.  The laws and regulations relating
to  the  sale  and delivery of prescription pet  medications
vary  from  state  to  state,  but  generally  require  that
prescription   pet   medications  be  dispensed   with   the
authorization  from  a  prescribing  veterinarian.   To  the
extent  that  we  are unable to maintain our  license  as  a
community pharmacy with the Florida Board of Pharmacy, or if
we  do  not  maintain the licenses granted  by  other  state
boards,  or if we become subject to actions by the  FDA,  or
other   enforcement   regulators,   our   distribution    of
prescription  medications to pet owners could  cease,  which
could have a material adverse effect on our operations.

  While  we  make  every  effort to fully  comply  with  the
applicable state rules, laws and regulations, from  time  to
time  we  have been the subject of administrative complaints
regarding  the  authorization  of  prescriptions  prior   to
shipment.  We cannot assure you that we will not continue to
be  the  subject of administrative complaints in the future.
We  cannot  guarantee you that we will  not  be  subject  to
reprimand, sanctions, probations, or fines, or that  one  or
more  of  our  pharmacy licenses may  not  be  suspended  or
revoked.  See Item 3. Legal Proceedings.

We currently purchase a portion of our prescription and non-
prescription  medications from third party distributors  and
we  are not an authorized distributor of these products.  We
do  not  have any guaranteed supply of these medications  at
any pre-established prices.

  For  the  fiscal years ended March 31, 2007 and 2006,  the
majority  of  our  sales  were  attributable  to  sales   of
prescription      and     non-prescription      medications.
Historically,  substantially all  the  major  pharmaceutical
manufacturers  have declined to sell prescription  and  non-
prescription pet medications directly to us.   In  order  to
assure  a  supply of these products, we purchase medications
from  various  secondary  sources, including  a  variety  of
domestic   distributors.   Our  business  strategy  includes
seeking  to  establish direct purchasing  arrangements  with
major pet pharmaceutical manufacturing companies.  If we are
not  successful in achieving this goal, we will continue  to
rely upon secondary sources.

  We  cannot  guarantee  that if  we  continue  to  purchase
prescription  and  non-prescription  pet  medications   from
secondary  sources  that  we will be  able  to  purchase  an
adequate supply to meet our customers' demands, or  that  we
will  be  able  to  purchase these products  at  competitive
prices.   As these products represent a significant  portion
of  our sales, our failure to fill customer orders for these
products could adversely impact our sales.  If we are forced
to  pay  higher  prices  for these  products  to  ensure  an
adequate supply, we cannot guarantee that we will be able to
pass  along to our customers any increases in the prices  we
pay  for  these medications.  This inability to  pass  along
increased  prices  could  materially  adversely  affect  our
financial condition and results of operations.

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

  Our  current product line contains approximately 750 SKUs.
A  significant  portion  of  our sales  is  attributable  to
products  representing approximately 90 SKUs.   We  need  to
properly manage our inventory to provide an adequate  supply
of  these  products  and avoid excessive  inventory  of  the
products representing the balance of the SKUs.  We generally
place orders for products with our suppliers based upon  our
internal estimates of the amounts of inventory we will  need
to fill future orders.  These estimates may be significantly
different  from the actual orders we receive.  In the  event
that subsequent orders fall short of original estimates,  we
may  be  left  with  excess inventory.   Significant  excess
inventory  could  result  in price discounts  and  increased
inventory carrying costs.  Similarly, if we fail to have  an
adequate   supply   of  some  SKUs,  we   may   lose   sales
opportunities.   We cannot guarantee that we  will  maintain
appropriate  inventory levels.  Any failure on our  part  to
maintain  appropriate inventory levels may have  a  material
adverse  effect  on our financial condition and  results  of
operations.


                                  6
<PAGE>


Resistance from veterinarians to authorize prescriptions, or
attempts/efforts on their part to discourage pet  owners  to
purchase  from internet pharmacies could cause our sales  to
decrease and could materially adversely affect our financial
condition and results of operations.

  Since  we  began  our  operations some veterinarians  have
resisted providing our customers with a copy of their  pet's
prescription or authorizing the prescription to our pharmacy
staff,  thereby effectively preventing us from filling  such
prescriptions under state law.  Some veterinarians have also
tried to discourage pet owners from purchasing from internet
pharmacies.   Sales of prescription medications  represented
approximately  29%  of  our  sales  for  the  fiscal   year.
Although veterinarians in some states are required by law to
provide the pet owner with this prescription information, if
the   number  of  veterinarians  who  refuse  to   authorize
prescriptions  should  increase,  or  if  veterinarians  are
successful  in discouraging pet owners from purchasing  from
internet  pharmacies,  our  sales  could  decrease  and  our
financial  condition  and  results  of  operations  may   be
materially adversely affected.

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

  While  we  ship  pet medications to customers  in  all  50
states,  approximately 50% of our sales for the fiscal  year
ended  March 31, 2007 were made to customers located in  the
states   of   California,   Florida,   Texas,   New    York,
Pennsylvania, New Jersey, and Virginia.  If for  any  reason
our  license to operate a pharmacy in one or more  of  those
states  should  be suspended or revoked, or  if  it  is  not
renewed,  our financial condition and results of  operations
may be materially adversely affected.

We  face  significant  competition  from  veterinarians  and
traditional  and online retailers and may  not  be  able  to
compete profitably with them.

  We  compete directly and indirectly with veterinarians for
the  sale  of  pet  medications and other  health  products.
Veterinarians hold a competitive advantage over  us  because
many pet owners may find it more convenient or preferable to
purchase these products directly from their veterinarians at
the  time of an office visit.  We also compete directly  and
indirectly with both online and traditional retailers of pet
medications  and  health and nutritional supplements.   Both
online  and  traditional retailers may  hold  a  competitive
advantage  over  us  because of longer operating  histories,
established  brand  names,  greater  resources,  and/or   an
established  customer  base.  Online retailers  may  have  a
competitive   advantage  over  us  because  of   established
affiliate  relationships to drive traffic to their  website.
Traditional retailers may hold a competitive advantage  over
us  because pet owners may prefer to purchase these products
from  a  store  instead  of online  or  through  catalog  or
telephone methods.  In order to effectively compete  in  the
future,  we  may be required to offer promotions  and  other
incentives, which may result in lower operating  margins  or
adversely affect the results of operations.

  We  also face a significant challenge from our competitors
forming  alliances with each other, such  as  those  between
online  and  traditional retailers. These relationships  may
enable  both  their  retail and online stores  to  negotiate
better   pricing   and  better  terms  from   suppliers   by
aggregating  the demand for products and negotiating  volume
discounts which could be a competitive disadvantage to us.

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

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




                                  7
<PAGE>


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

  We  rely  on  a combination of trademarks, trade  secrets,
copyright laws, and contractual restrictions to protect  our
intellectual  property rights.  These  afford  only  limited
protection.  Despite our efforts to protect our  proprietary
rights,  unauthorized parties may attempt to copy  our  non-
prescription private label generic equivalents, when and  if
developed,  as well as aspects of our sales formats,  or  to
obtain  and  use information that we regard as  proprietary,
including the technology used to operate our website and our
content, and our trademarks.

  Litigation or proceedings before the United States  Patent
and Trademark Office or other bodies may be necessary in the
future  to  enforce  our intellectual  property  rights,  to
protect our trade secrets and domain names, and to determine
the  validity and scope of the proprietary rights of others.
Any  litigation or adverse priority proceeding could  result
in  substantial costs and diversion of resources, and  could
seriously harm our business and operating results.

    Third  parties may also claim infringement  by  us  with
respect to past, current, or future technologies.  We expect
that  participants  in  our  markets  will  be  increasingly
involved  in  infringement claims as the number of  services
and  competitors in our industry segment grows.  Any  claim,
whether meritorious or not, could be time-consuming,  result
in  costly  litigation,  cause service  upgrade  delays,  or
require  us  to enter into royalty or licensing  agreements.
These royalty or licensing agreements might not be available
on  terms  acceptable to us or at all.  See  Item  3.  Legal
Proceedings.


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

  Our Internet addresses, www.1800petmeds.com, www.1888petmeds.com,
                          -------------------  -------------------
www.petmedexpress.com, and www.petmeds.com  are  critical  to  our
---------------------      ---------------
brand  recognition  and our  overall  success.  If we  are  unable
to    protect  these  Internet  addresses, our  competitors  could
capitalize on our brand recognition. We are aware of substantially
similar  Internet  addresses,  including  www.petmed.com, used  by
                                          --------------
competitors. Governmental  agencies and  their designees generally
regulate  the  acquisition  and maintenance of Internet addresses.
The regulation of Internet addresses in the  United  States and in
foreign countries has changed, and may  undergo  further change in
the near future. Furthermore, the relationship between regulations
governing Internet addresses  and laws  protecting  trademarks and
similar proprietary  rights is unclear.  Therefore, we may  not be
able  to  protect  our own  Internet  addresses, or prevent  third
parties from acquiring Internet  addresses  that   are confusingly
similar to, infringe upon, or otherwise decrease  the value of our
Internet addresses.

Since all of our operations are housed in  a  single  location, we
are  more  susceptible to business interruption  in  the  event of
damage to or disruptions in our facility.

  Our  headquarters and distribution center are  located  in
the same building in South Florida, and all of our shipments
of  products  to  our  customers are  made  from  this  sole
distribution center.  We have no present plans to  establish
any additional distribution centers or offices.  Because  we
consolidate  our  operations in one location,  we  are  more
susceptible  to power and equipment failures,  and  business
interruptions  in  the  event of fires,  floods,  and  other
natural  disasters  than  if  we had  additional  locations.
Furthermore, because we are located in South Florida,  which
is   a   hurricane-sensitive  area,  we   are   particularly
susceptible  to the risk of damage to, or total  destruction
of, our headquarters and distribution center and surrounding
transportation  infrastructure caused by  a  hurricane.   We
cannot  assure you that we are adequately insured  to  cover
the  amount of any losses relating to any of these potential
events, business interruptions resulting from damage  to  or
destruction of our headquarters and distribution center,  or
power and equipment failures relating to our call center  or
websites,   or   interruptions  or  disruptions   to   major
transportation infrastructure, or other events that  do  not
occur on our premises.

A  portion  of  our  sales are seasonal  and  our  operating
results are difficult to predict and may fluctuate.

  Because  our  operating results are difficult to  predict,
we   believe  that  quarter-to-quarter  comparisons  of  our
operating  results are not a good indication of  our  future
performance.  The majority of our product sales are affected
by  the  seasons, due to the seasonality of mainly heartworm
and  flea  and  tick  medications.  Seasonality  trends  are
divided  into  percentage  of sales  by  quarter.   For  the
quarters  ended June 30, 2006, September 30, 2006,  December
31,  2006, and March 31, 2007, Company sales were 31%,  27%,
19%, and 23%, respectively.


                                  8
<PAGE>


  In  addition to the seasonality of our sales,  our  annual
and  quarterly operating results have fluctuated in the past
and  may  fluctuate significantly in the  future  due  to  a
variety  of  factors, many of which are out of our  control.
Factors  that  may cause our operating results to  fluctuate
include:

  *  Our  ability to obtain new customers at  a  reasonable
     cost, retain existing customers, or encourage reorders;
  *  Our ability to increase the number of visitors to  our
     website,  or  our ability to convert visitors to our
     website into customers;
  *  The mix of medications and other pet products sold by us;
  *  Our ability to manage inventory levels or obtain an
     adequate supply of products;
  *  Our  ability to adequately  maintain, upgrade and
     develop our website, the systems that we use to process
     customers' orders and payments, or our computer network;
  *  Increased competition within our market niche;
  *  Price competition;
  *  Increases in the cost of advertising;
  *  The amount and timing of operating costs and capital
     expenditures relating to expansion of our product line or
     operations; and
  *  Disruption of our toll-free  telephone service, technical
     difficulties, systems and Internet outages, or slowdowns.

Any  change in one or more of these factors could materially
adversely  affect  our financial condition  and  results  of
operations in future periods.

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

  The  market  price  of  our  common  stock  may  fluctuate
significantly  in response to a number of factors,  some  of
which  are  beyond  our  control.   These  factors  include:
quarterly  variations  in  operating  results;  changes   in
accounting treatments or principles; announcements by us  or
our  competitors  of  new products and  services  offerings,
significant    contracts,    acquisitions    or    strategic
relationships; additions or departures of key personnel; any
future sales of our common stock or other securities;  stock
market  price  and  volume fluctuations  of  publicly-traded
companies;  and  general  political,  economic,  and  market
conditions.

  In  some  future  quarter our operating results  may  fall
below the expectations of securities analysts and investors,
which could result in a decrease in the trading price of our
common   stock.   In  the  past,  securities  class   action
litigation  has  often  been  brought  against   a   company
following periods of volatility in the market price  of  its
securities.  We may be the targets of similar litigation  in
the   future.    Securities  litigation  could   result   in
substantial  costs  and  divert management's  attention  and
resources,  which  could seriously  harm  our  business  and
operating results.

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

  Our charter permits our Board of Directors to issue up  to
5,000,000  shares  of  preferred stock  without  stockholder
approval.    Currently  there  are  2,500  shares   of   our
Convertible  Preferred Stock issued and  outstanding.   This
leaves  4,997,500  shares of preferred stock  available  for
issuance at the discretion of our Board of Directors.  These
shares,  if  issued,  could contain  dividend,  liquidation,
conversion,  voting, or other rights which  could  adversely
affect the rights of our common stockholders and which could
also  be utilized, under some circumstances, as a method  of
discouraging,  delaying or preventing a change  in  control.
Provisions  of  our  articles of incorporation,  bylaws  and
Florida  law could make it more difficult for a third  party
to  acquire us, even if many of our stockholders believe  it
is in their best interest.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

  None

ITEM 2.  PROPERTIES

  Our   facilities,   including  our   principal   executive
offices,  are  located  at 1441 S.W.  29th  Avenue,  Pompano
Beach,  Florida 33069.  The Company leases its 50,000 square
foot  executive offices and warehouse facility under a  non-
cancelable  operating  lease, through  May  31,  2009.   The
Company is responsible for certain maintenance costs, taxes,
and  insurance under this lease.  The future minimum  annual
lease  payments  are as follows: $500,000 for  fiscal  2008,
$520,000 for fiscal 2009, and $87,000 for fiscal 2010.


                                  9
<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

  On  January 19, 2006, PetMed Express, Inc. was added as  a
defendant in the matter of Yali Golan v. Marc Puleo  (former
President  and  Chairman of the Board of  Directors  of  the
Company),  filed  in  the  Circuit  Court  of  the  Eleventh
Judicial Circuit in and for Miami-Dade County, Florida.   On
March  6,  2006, the Company filed a motion to  dismiss  all
counts of the complaint against the Company and on March 30,
2007,  the  United  States District Court for  the  Southern
District of Florida granted the Company's motion to  dismiss
in its entirety.

  The  Company was a defendant in a multi-defendant lawsuit,
filed in August 2006 in the United States District Court For
The  Eastern  District of Texas, Marshall Division,  seeking
injunctive  and  monetary  relief  styled  Ronald  A.   Katz
Technology Licensing, L.P., v. Aetna Inc. et al., Cause  No.
206CV  335.   The  lawsuit  alleged  that  the  Company  was
infringing on certain telephone call manipulation technology-
related  patents owned by the plaintiff.  Without  admitting
any  liability  or  wrongdoing,  and  with  no  finding   or
admission as to the merit or lack of merit of any  claim  or
defense  asserted  in  connection with  the  litigation,  in
January,   2007,  the  Company  entered  into  a   licensing
agreement  for  a confidential amount, and a Stipulation  of
Dismissal   with  Prejudice  was  filed  with   the   Court,
dismissing the lawsuit against the Company.

Routine Proceedings

    The  Company  is  a  party  to  routine  litigation  and
administrative  complaints  incidental  to   its   business.
Management does not believe that the resolution  of  any  or
all of such routine litigation and administrative complaints
is likely to have a material adverse effect on the Company's
financial  condition or results of operations.  The  Company
has  settled  complaints that had been  filed  with  various
states'  pharmacy  boards in the  past.   There  can  be  no
assurances made that other states will not attempt  to  take
similar  actions against the Company in the  future.   Legal
costs related to the above matters are expensed as incurred.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No  matter  was submitted to a vote of our stockholders
during the fourth quarter of the fiscal year ended March 31,
2007.








                                  10
<PAGE>


                             PART II

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

       The  Company's common shares are traded on the NASDAQ
Global  Select  Market ("NASDAQ") under the  symbol  "PETS."
The prices set forth below reflect the range of high and low
closing  sale  prices per share in each of the  quarters  of
fiscal  2007  and  2006 as reported by  the  NASDAQ.   These
prices    represent   quotations   among   dealers   without
adjustments  for retail mark-ups, markdowns or  commissions,
and may not represent actual transactions.

<TABLE>
<CAPTION>
   Fiscal 2007:            High      Low
   <S>                    <C>       <C>
   First Quarter          $17.72    $10.97
   Second Quarter         $13.08    $9.44
   Third Quarter          $14.19    $10.13
   Fourth Quarter         $14.17    $11.74

   Fiscal 2006:            High      Low

   First Quarter          $8.21     $6.50
   Second Quarter         $11.64    $7.63
   Third Quarter          $15.52    $9.83
   Fourth Quarter         $19.99    $14.34
</TABLE>


There  were 86 holders of record of our common stock at  May
31,  2007,  and we estimate there were approximately  10,900
beneficial stockholders on that date.

Dividend Policy

  The  Company has never paid cash dividends on  our  common
stock.   We  presently intend to retain future  earnings  to
finance  the expansion of our business.  Our future dividend
policy  will  depend on our earnings, capital  requirements,
expansion  plans,  financial condition, and  other  relevant
factors.

Securities Authorized for Issuance under Equity Compensation
Plans

   The following table sets forth securities authorized  for
issuance   under   equity  compensation   plans,   including
individual compensation arrangements, by us under  our  1998
Stock   Option   Plan,  2006  Employee  Equity  Compensation
Restricted  Stock  Plan,  and 2006 Outside  Director  Equity
Compensation Restricted Stock Plan as of March 31, 2007:
<TABLE>
<CAPTION>
                      EQUITY COMPENSATION PLAN INFORMATION

                                   Number of securities
                                    to be issued upon       Weighted average
                                  exercise of outstanding  exercise price of     Number of securities
                                   options, warrants      outstanding options,   remaining available
Plan category                           and rights        warrants and rights    for future issuance
-----------------------------------------------------------------------------------------------------
<S>                                      <C>                     <C>                   <C>
                                           (a)                    (b)                    (c)
1998 Stock Option Plan                   665,768                 $8.65                 810,068

2006 Employee Restricted Stock Plan      136,625                    -                  863,375

2006 Director Restricted Stock Plan       20,000                    -                  180,000
                                       ---------                                     ---------

 Total                                   822,393                                     1,853,443
                                       =========                                     =========
</TABLE>
Share Repurchase Plan

   On  November  8, 2006, the Company's Board  of  Directors
approved a share repurchase plan of up to $20 million.  This
plan  is  intended to be implemented through purchases  made
from  time  to  time  in either the open market  or  through
private transactions at the Company's discretion, subject to
market  conditions  and other factors,  in  accordance  with
Securities and Exchange Commission requirements.  There  can
be  no  assurances as to the precise number of  shares  that
will be repurchased under the share repurchase plan, and the
Company  may  discontinue the share repurchase plan  at  any
time   subject  to  compliance  with  applicable  regulatory
requirements.   Shares  purchased  pursuant  to  the   share
repurchase  plan will either be cancelled  or  held  in  the
Company's  treasury.  Any share repurchase would reduce  our
available  cash.   As of the date of this report  no  shares
have been repurchased under this share repurchase plan.


                                  11
<PAGE>


Performance Graph

   Set  forth  below  is  a graph comparing  the  cumulative
performance of our Common Stock with the Standard  &  Poor's
Composite-500  Stock Index (the "S&P 500")  and  the  Nasdaq
Composite, from March 31, 2002 to March 31, 2007.  The graph
assumes that $100 was invested on March 31, 2002 in each  of
our  Common Stock, the S&P 500 and the Nasdaq Composite  and
that all dividends were reinvested.


                   [GRAPHIC OF GRAPH]


<TABLE>
<CAPTION>
  Performance graph data:

                                   Fiscal Year Ended March 31,
                         ----------------------------------------------
                          2002   2003     2004    2005   2006    2007
                         ----------------------------------------------
<S>                      <C>     <C>    <C>      <C>    <C>     <C>
Nasdaq Composite         100.00  72.68   108.07  108.34  126.79  131.23
S&P 500                  100.00  73.92    98.15  102.89  112.85  123.83
PetMed Express, Inc.     100.00 295.00  1375.00  926.25 2221.25 1481.25
</TABLE>





                                  12
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

   The  following  selected financial data  should  be  read
together  with  "Management's  Discussion  and  Analysis  of
Financial   Condition  and  Results  of   Operations,"   the
consolidated  financial statements and  notes  thereto,  and
other  financial  information  included  elsewhere  in  this
Annual Report on Form 10-K.  The consolidated statements  of
income data set forth below for the fiscal years ended March
31,  2007, 2006, and 2005 and the consolidated balance sheet
data  as  of March 31, 2007 and 2006 have been derived  from
our  audited  consolidated financial  statements  which  are
included elsewhere in this Annual Report on Form 10-K.   The
consolidated statements of income data set forth  below  for
the  fiscal  years  ended March 31, 2004 and  2003  and  the
consolidated balance sheet data as of March 31,  2005,  2004
and  2003  have  been derived from our audited  consolidated
financial  statements which are not included in this  Annual
Report on Form 10-K.

<TABLE>
<CAPTION>

                     STATEMENTS OF INCOME

                                                       Fiscal Year Ended March 31,
                             ------------------------------------------------------------------------------
                                   2007            2006            2005            2004            2003
                             ------------------------------------------------------------------------------
<S>                          <C>             <C>             <C>             <C>             <C>
Sales                        $  162,246,407  $  137,583,155  $  108,357,747  $   93,994,233  $   54,974,916
Cost of sales                    97,680,238      83,244,366      64,700,002      55,824,406      31,517,639
Gross profit                     64,566,169      54,338,789      43,657,745      38,169,827      23,457,277
Operating expenses               43,066,144      36,193,545      31,156,119      28,958,433      19,974,270
Net income                       14,443,502      12,063,514       8,010,370       5,813,604       3,257,565
Net income per common share:
       Basic                           0.60            0.51            0.35            0.30            0.19
       Diluted                         0.60            0.50            0.34            0.25            0.16
Weighted average number of
  common shares outstanding:
       Basic                     24,109,035      23,658,722      22,862,417      19,471,681      17,300,130
       Diluted                   24,270,879      24,211,955      23,833,189      23,689,866      20,749,515

                       BALANCE SHEET DATA

                                                                 March 31,
                             ------------------------------------------------------------------------------
                                   2007            2006            2005            2004            2003
                             ------------------------------------------------------------------------------
Working capital              $   50,613,455  $   34,968,771  $   21,968,784  $   11,338,004  $    3,017,641
Total assets                     61,218,487      42,624,159      28,119,483      18,480,808       9,025,796
Total liabilities                 7,354,914       4,984,630       3,902,419       4,486,299       3,433,108
Shareholders' equity             53,863,573      37,639,529      24,217,064      13,994,509       5,592,688

                    NON FINANCIAL DATA (UNAUDITED)

                                                                 March 31,
                             ------------------------------------------------------------------------------
                                   2007            2006            2005            2004            2003
                             ------------------------------------------------------------------------------
New customers acquired              681,000         624,000         510,000         572,000         414,000
Total accumulated customers (1)   3,136,000       2,455,000       1,831,000       1,321,000         749,000
</TABLE>
(1) includes both active and inactive customers


                                  13
<PAGE>


ITEM 7. 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, and  issued  its  first
catalog  in  the  fall  of  1997.   This  catalog  displayed
approximately 1,200 items, including prescription  and  non-
prescription pet medications, other pet health products, and
pet  accessories.  In fiscal 2001, the Company  focused  its
product  line on approximately 600 of the most  popular  pet
medications  and other health products for  dogs  and  cats.
Presently, the Company's product line includes approximately
750  of  the  most popular pet medications and other  health
products for dogs, cats, and horses.

  The   Company   markets  its  products  through   national
television,   online,  and  direct  mail/print   advertising
campaigns which direct consumers to order by phone or on the
Internet, and aim to increase the recognition of the "1-800-
PetMeds"  brand name.  Currently, approximately 62%  of  all
sales  are generated via the Internet compared to  57%  last
year.

   The  Company's sales consist of products sold  mainly  to
retail  consumers  and  minimally  to  wholesale  customers.
Typically,  the  Company's customers pay by credit  card  or
check at the time the order is shipped.  The Company usually
receives  cash settlement in two to three banking  days  for
sales  paid  by credit cards, which minimizes  the  accounts
receivable  balances relative to the Company's  sales.   The
Company's sales returns average was approximately 1.7 %  and
1.5 % of sales for the fiscal years ended March 31, 2007 and
2006,  respectively.  The twelve-month average purchase  was
approximately  $79 and $77 per order for  the  fiscal  years
ended March 31, 2007 and 2006, respectively.

Critical Accounting Policies

  Our  discussion  and  analysis of our financial  condition
and  the  results  of  our operations  are  based  upon  our
consolidated  financial statements  and  the  data  used  to
prepare   them.    The   Company's  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, long-lived assets,  income  taxes,
litigation  and  contingencies.  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  primarily  to retail consumers  and  minimally  to
wholesale  customers.  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  the  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.  At March 31, 2007  and  2006  the
allowance  for  doubtful accounts was approximately  $28,000
and $23,000, respectively.

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 $122,000 and $306,000 for the fiscal years
ended March 31, 2007 and 2006, respectively.






                                  14
<PAGE>


Property and equipment

   Property and equipment are stated at cost and depreciated
using  the  straight-line method over the  estimated  useful
lives  of  the assets.  The furniture, fixtures,  equipment,
and  computer software are depreciated over periods  ranging
from  three  to  seven  years.  Leasehold  improvements  and
assets under capital lease agreements are amortized over the
shorter of the underlying lease agreement or the useful life
of the asset.

Long-lived assets

   Long-lived  assets  are reviewed for impairment  whenever
events  or  changes  in  circumstances  indicate  that   the
carrying  amount may not be recoverable.  Recoverability  of
assets is measured by a comparison of the carrying amount of
the  asset to net future cash flows expected to be generated
from the asset.

Advertising

  The  Company's advertising expense consists  primarily  of
television  advertising,  internet  marketing,  and   direct
mail/print  advertising.  Television 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 catalog  and
postcards are produced, distributed, or superseded.

Accounting for income taxes

  The Company accounts for income taxes under the provisions
of   SFAS  No.  109,  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 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  Consolidated
Statements of Income:
<TABLE>
<CAPTION>

                                            Fiscal Year Ended March 31,

                                              2007      2006      2005
                                            -------   -------   -------
<S>                                         <C>       <C>       <C>
 Sales                                       100.0 %   100.0 %   100.0 %
 Cost of sales                                60.2      60.5      59.7
                                            -------   -------   -------
 Gross profit                                 39.8      39.5      40.3
                                            -------   -------   -------
 Operating expenses:
   General and administrative                 10.6      10.2      10.6
   Advertising                                15.6      15.7      17.7
   Depreciation and amortization               0.3       0.4       0.5
                                            -------   -------   -------
 Total operating expenses                     26.5      26.3      28.8
                                            -------   -------   -------
 Income from operations                       13.3      13.2      11.5
                                            -------   -------   -------
 Total other income (expense)                  1.0       0.7       0.1
                                            -------   -------   -------
 Income before provision for income taxes     14.3      13.9      11.6

 Provision for income taxes                    5.4       5.1       4.2
                                            -------   -------   -------
 Net income                                    8.9 %     8.8 %     7.4 %
                                            =======   =======   =======
</TABLE>


                                  15
<PAGE>


Fiscal 2007 Compared to Fiscal 2006

Sales
-----

  Sales increased $24,663,000, or 17.9%, to $162,246,000 for
the  year  ended March 31, 2007, from $137,583,000  for  the
fiscal year ended March 31, 2006.  The increase in sales can
be primarily attributed to increased retail reorders and new
orders,  offset  by  decreased wholesale sales,  during  the
fiscal year.

   The  Company  has committed certain amounts  specifically
designated towards television, direct mail/print and  online
advertising to stimulate sales, create brand awareness,  and
acquire  new customers.  Retail reorder sales have increased
by  approximately  $22,173,000, or 25.1%,  to  approximately
$110,540,000 for the fiscal year ended March 31, 2007,  from
approximately  $88,367,000 for the fiscal year  ended  March
31,  2006.   Retail  new  order  sales  have  increased   by
approximately   $5,608,000,  or  12.3%,   to   approximately
$51,096,000 for the fiscal year ended March 31,  2007,  from
approximately  $45,488,000 for the fiscal year  ended  March
31,  2006.   Wholesale sales have decreased by approximately
$3,118,000,  or  83.6%, to approximately  $610,000  for  the
fiscal   year  ended  March  31,  2007,  from  approximately
$3,728,000  for the fiscal year ended March  31,  2006.   We
limited our wholesale sales in fiscal 2007 and we may  limit
future wholesale sales to continue to focus our business  on
retail  sales.   The Company acquired approximately  681,000
new  customers  for the fiscal year ended  March  31,  2007,
compared to 624,000 new customers for the same period in the
prior  year.   There can be no assurances that  this  growth
trend will continue due to increased price competition  from
veterinarians and traditional and online retailers.

   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 2007,  the
Company's sales were approximately 31%, 27%, 19%,  and  23%,
respectively.

Cost of sales
-------------

   Cost  of  sales increased by $14,436,000,  or  17.3%,  to
$97,680,000 for the fiscal year ended March 31,  2007,  from
$83,244,000 for the fiscal year ended March 31,  2006.   The
increase  in  cost  of  sales is  directly  related  to  the
increase  in  retail  sales in fiscal 2007  as  compared  to
fiscal  2006.  As a percent of sales, the cost of sales  was
60.2%  in fiscal 2007, as compared to 60.5% in fiscal  2006.
The  percentage  decrease  can be  mainly  attributed  to  a
decrease in our wholesale sales, which had a higher cost  of
sales  percentage, and due to a shift in our product mix  to
higher gross profit margin items, offset by additional price
discounts given to customers.

Gross profit
------------

   Gross  profit  increased  by $10,227,000,  or  18.8%,  to
$64,566,000 for the fiscal year ended March 31,  2007,  from
$54,339,000 for the fiscal year ended March 31, 2006.  Gross
profit as a percentage of sales for fiscal 2007 and 2006 was
39.8%  and 39.5%, respectively.  The gross profit percentage
increase  can  be  mainly attributed to a  decrease  in  our
wholesale  sales, which had a lower gross profit percentage,
and due to a shift in our product mix to higher gross profit
margin items, offset by additional price discounts given  to
customers.

General and administrative expenses
-----------------------------------

    General   and   administrative  expenses  increased   by
$3,215,000,  or  22.8%, to $17,293,000 for the  fiscal  year
ended  March  31, 2007 from $14,078,000 for the fiscal  year
ended  March 31, 2006.  General and administrative  expenses
as a percentage of sales was 10.6% compared to 10.2% for the
fiscal  years  ended  March 31, 2007 and 2006, respectively.
The  increase in general and administrative expenses for the
fiscal  year ended March 31, 2007 was primarily due  to  the
following:  a $2,194,000 increase to payroll expenses,  with
$893,000  of  the increase due to the recognition  of  stock
option  compensation expense during the period  relating  to
the implementation of SFAS 123R, " Share Based Payment," and
the  remaining increase  attributed to the addition  of  new
employees  in  the  customer care and  pharmacy  departments
enabling  the  Company  to sustain its  growth;  a  $530,000
increase  to  credit  card and bank service  fees  which  is
directly attributable to increased sales in the fiscal year;
a  $260,000  increase to licenses and fees, the majority  of
the  increase relating to the first time compliance  with  a
California  mill  assessment fee on certain products sold in
that  state;   a  $169,000  increase  to  property  expenses
relating to additional  rent due to our warehouse expansion;
a $125,000 increase to office expenses which can be directly
attributed to   increased  sales;  a  $105,000  increase  to
telephone expenses  resulting  from receiving one-time usage
credits during the prior fiscal  year; a $87,000 increase to
insurance  expenses,  relating to an  increase  in  premiums
paid;  and  a  $36,000  increase  to  other  expenses  which
includes  bad  debt  and  travel expenses.   Offsetting  the
increase  was  a  $162,000  one-time  charge,  relating   to
state/county sales tax, which was not collected on behalf of
customers, which was booked in the first quarter  of  fiscal
2006;   and  a  $129,000  decrease  in  professional   fees,
primarily  relating  to  the reduction  of  legal  fees  and
Sarbanes-Oxley compliance fees.


                                  16
<PAGE>


Advertising expenses
--------------------

     Advertising   expenses   increased   by   approximately
$3,672,000,   or   approximately  17.0%,  to   approximately
$25,243,000  for the fiscal year ended March 31,  2007  from
approximately  $21,571,000 for the fiscal year  ended  March
31,  2006.   The  increase in advertising expenses  for  the
fiscal  year  ended March 31, 2007 was due to the  Company's
plan  to  commit  certain  amounts  specifically  designated
towards   television,   direct   mail/print,   and    online
advertising to stimulate sales, create brand awareness,  and
acquire new customers.

   The advertising cost of acquiring a new customer, defined
as total advertising cost divided by new customers acquired,
for  the  fiscal year ended March 31, 2007 was $37, compared
to $35 for the same period the prior year.  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 from veterinarians and other retailers  of
pet  medications.  Historically, the advertising environment
fluctuates  due  to  supply and demand.   A  less  favorable
advertising  environment may negatively  impact  future  new
order  sales.  As a percentage of sales, advertising expense
was  15.6%  in fiscal 2007, as compared to 15.7%  in  fiscal
2006.   The Company currently anticipates advertising  as  a
percentage  of  sales to range from approximately  14.0%  to
16.0%  in  fiscal 2008.  However, the advertising percentage
will  fluctuate  quarter to quarter due to  seasonality  and
advertising  availability.  For the fiscal year ended  March
31, 2007, quarterly advertising expenses as a percentage  of
sales ranged between 12% and 18%.

Depreciation and amortization
-----------------------------

   Depreciation  and amortization decreased by approximately
$15,000,  or 2.6%, to approximately $530,000 for the  fiscal
year  ended  March 31, 2007 from approximately $545,000  for
the  fiscal  year  ended March 31, 2006.  This  decrease  to
depreciation and amortization expense for fiscal 2007 can be
attributed to the fact that existing property and  equipment
items have been fully depreciated.

Other income
------------

   Other  income  increased  by approximately  $811,000,  or
91.1%, to approximately $1,701,000 for the fiscal year ended
March  31, 2007, from approximately $890,000 for the  fiscal
year ended March 31, 2006.  The increase to other income can
be  primarily attributed to increased interest income due to
increases in the Company's cash balance, which is swept into
an  interest bearing overnight account, and a tax-free short
term   investment  account.   The  increase  can   also   be
attributed to additional advertising revenue generated  from
our  website.  Interest income may decrease in future  years
if the Company utilizes its cash balances on its $20,000,000
share repurchase plan or on its operating activities.

Provision for income taxes
--------------------------

   For  the fiscal years ended March 31, 2007 and 2006,  the
Company  recorded an income tax provision for  approximately
$8,757,000  and $6,972,000, respectively, which resulted  in
an effective tax rate of 37.7% and 36.6%, respectively.

Net income
----------

   Net  income  increased  by approximately  $2,380,000,  or
19.7%,  to  approximately $14,444,000 for  the  fiscal  year
ended March 31, 2007 from approximately $12,064,000 for  the
fiscal  year ended March 31, 2006.  The increase was  mainly
attributable  to the Company's sales growth  and  profitable
operations.


                                  17
<PAGE>


Fiscal 2006 Compared to Fiscal 2005

Sales
-----

  Sales increased $29,225,000, or 27.0%, to $137,583,000 for
the  year  ended March 31, 2006, from $108,358,000  for  the
year  ended  March 31, 2005.  The increase in sales  can  be
primarily attributed to increased retail new orders,  retail
reorders and wholesale sales, during the fiscal year.

   The  Company  has committed certain amounts  specifically
designated towards television, direct mail/print and  online
advertising to stimulate sales, create brand awareness,  and
acquire  new customers.  Retail reorder sales have increased
by  approximately  $19,648,000, or 28.6%,  to  approximately
$88,367,000 for the fiscal year ended March 31,  2006,  from
approximately  $68,719,000 for the fiscal year  ended  March
31,  2005.   Retail  new  order  sales  have  increased   by
approximately   $8,280,000,  or  22.3%,   to   approximately
$45,488,000 for the fiscal year ended March 31,  2006,  from
approximately  $37,208,000 for the fiscal year  ended  March
31,  2005.   Wholesale sales have increased by approximately
$1,297,000,  or 53.4%, to approximately $3,728,000  for  the
fiscal   year  ended  March  31,  2006,  from  approximately
$2,431,000 for the fiscal year ended March 31, 2005.  We may
limit  our  wholesale  sales in  the  future  to  focus  our
business    on   retail   sales.    The   Company   acquired
approximately 624,000 new customers for the year ended March
31,  2006,  compared to 510,000 new customers for  the  same
period  in  the  prior year.  The increase in  retail  sales
growth  for  fiscal  2006 compared to  fiscal  2005  can  be
attributed to increased advertising effectiveness, due to  a
more  favorable advertising environment, with more effective
creative,  and discount offers.  There can be no  assurances
that  this  trend  will  continue  due  to  increased  price
competition  from veterinarians and traditional  and  online
retailers.

   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 2006,  the
Company's sales were approximately 32%, 28%, 19%,  and  21%,
respectively.

Cost of sales
-------------

   Cost  of  sales increased by $18,544,000,  or  28.7%,  to
$83,244,000 for the fiscal year ended March 31,  2006,  from
$64,700,000 for the fiscal year ended March 31,  2005.   The
increase  in  cost  of  sales is  directly  related  to  the
increase  in  retail and wholesale sales in fiscal  2006  as
compared to fiscal 2005.  As a percent of sales, the cost of
sales  was  60.5% in fiscal 2006, as compared  to  59.7%  in
fiscal  2005.  The percentage increase can be attributed  to
increases in our product and freight costs, discounts  given
to  our  customers,  and increases in our  wholesale  sales,
which have a lower gross profit percentage.

Gross profit
------------

   Gross  profit  increased  by $10,681,000,  or  24.5%,  to
$54,339,000 for the fiscal year ended March 31,  2006,  from
$43,658,000 for the fiscal year ended March 31, 2005.  Gross
profit as a percentage of sales for fiscal 2006 and 2005 was
39.5%  and 40.3%, respectively.  The gross profit percentage
decrease  can be attributed to increases in our product  and
freight  costs,  discounts  given  to  our  customers,   and
increases  in our wholesale sales, which have a lower  gross
profit percentage.

General and administrative expenses
-----------------------------------

    General   and   administrative  expenses  increased   by
$2,682,000,  or  23.5%, to $14,078,000 for the  fiscal  year
ended  March  31, 2006 from $11,396,000 for the fiscal  year
ended  March  31, 2005.  However, general and administrative
expense as a percentage of sales was 10.2% compared to 10.6%
for  the  fiscal  years  ended  March  31,  2006  and  2005,
respectively.   The  increase in general and  administrative
expenses for the year ended March 31, 2006 was primarily due
to  the  following: a $798,000 increase to payroll  expenses
which can be attributed to the addition of new employees  in
the  customer  care  and pharmacy departments  enabling  the
company  to  sustain  its  growth; a  $663,000  increase  to
professional   fees,   primarily   relating   to   increased
pharmacist,  accounting, the majority relating  to  Sarbanes
Oxley  compliance,  and legal fees; a $646,000  increase  to
credit   card  and  bank  service  fees  which  is  directly
attributable  to increased sales in the period;  a  $183,000
increase  to  property expenses, relating  to  unanticipated
hurricane-related   charges,  mainly  generator   and   fuel
expenses, during the third quarter and additional  rent  due
to  our  warehouse  expansion; a  $162,000  one-time  charge
relating  to state/county sales tax which was not  collected
on behalf of our customers; a $110,000 increase to telephone
expenses resulting from receiving one time usage credits  in
the quarters ended September 30, 2004 and December 31, 2004;
a  $85,000 increase to office expenses which can be directly
attributed  to increased sales and unanticipated  hurricane-
related  charges  in  the  period;  a  $36,000  increase  to
insurance  expenses,  relating to an  increase  in  premiums
paid; and a $1,000 decrease to other expenses.


                                  18
<PAGE>


Advertising expenses
--------------------

     Advertising   expenses   increased   by   approximately
$2,385,000,   or   approximately  12.4%,  to   approximately
$21,571,000  for the fiscal year ended March 31,  2006  from
approximately  $19,186,000 for the fiscal year  ended  March
31,  2005.   The  increase in advertising expenses  for  the
fiscal  year  ended March 31, 2006 was due to the  Company's
plan  to  commit  certain  amounts  specifically  designated
towards   television,   direct   mail/print,   and    online
advertising to stimulate sales, create brand awareness,  and
acquire new customers.

  The advertising costs of acquiring a new customer, defined
as   total   advertising  costs  divided  by  new  customers
acquired, for the fiscal year ended March 31, 2006 was  $35,
compared to $38 for the same period the prior year.  We  can
attribute  this  reduction  to an  increase  in  advertising
efficiency  due to a more favorable advertising environment.
There   can  be  no  assurances  made  that  this  favorable
advertising  environment will continue.   Historically,  the
advertising environment fluctuates due to supply and demand.
A  less  favorable  advertising environment  may  negatively
impact   new  order  sales.   As  a  percentage  of   sales,
advertising expense was 15.7% in fiscal 2006, as compared to
17.7%  in  fiscal  2005.  The Company currently  anticipates
advertising  as  a  percentage  of  sales  to   range   from
approximately 15.0% to 16.0% in fiscal 2007.   However,  the
advertising percentage will fluctuate quarter to quarter due
to  seasonality and advertising availability.  For the  year
ended  March 31, 2006, quarterly advertising expenses  as  a
percentage of sales ranged between 12% and 18%.

Depreciation and amortization
-----------------------------

   Depreciation  and amortization decreased by approximately
$29,000,  or 5.1%, to approximately $545,000 for the  fiscal
year  ended  March 31, 2006 from approximately $574,000  for
the  fiscal  year  ended March 31, 2005.  This  decrease  to
depreciation and amortization expense for fiscal 2006 can be
attributed  to  decreased property and  equipment  additions
since the first quarter of fiscal 2005.

Other income
------------

   Other  income  increased  by  approximately  $788,000  to
approximately $890,000 for the fiscal year ended  March  31,
2006,  from approximately $102,000 for the fiscal year ended
March  31,  2005.   The  increase to  other  income  can  be
primarily  attributed to increased interest  income  due  to
increases in the Company's cash balance, which is swept into
an  interest  bearing overnight account and  tax-free  short
term   investment   account,  and  to  advertising   revenue
generated from our website.  Interest income may decrease in
future  years as the Company utilizes its cash  balances  on
operating activities.

Provision for income taxes
--------------------------

   For  the fiscal years ended March 31, 2006 and 2005,  the
Company  recorded an income tax provision for  approximately
$6,972,000  and $4,593,000, respectively, which resulted  in
an effective tax rate of 36.6% and 36.4%, respectively.

Net income
----------

   Net  income  increased  by approximately  $4,054,000,  or
50.6%,  to  approximately $12,064,000 for  the  fiscal  year
ended  March 31, 2006 from approximately $8,010,000 for  the
fiscal  year ended March 31, 2005.  The significant increase
was  mainly  attributable to the Company's sales growth  and
profitable  operations  and  the  leverage  of  general  and
administrative and advertising expenses.

Liquidity and Capital Resources

       The  Company's working capital at March 31, 2007  and
2006  was  $50,613,000 and $34,969,000,  respectively.   The
$15,644,000  increase  in  working  capital  was   primarily
attributable to cash flow generated from operations and  the
exercise  of stock options.  Net cash provided by  operating
activities  was $16,564,000 and $10,277,000 for  the  fiscal
years ended March 31, 2007 and 2006, respectively.  Net cash
used in investing activities was $17,300,000 and $11,808,000
for  the  fiscal  years  ended  March  31,  2007  and  2006,
respectively.  This $5,492,000 increase can be attributed to
increased  temporary investments and increased property  and
equipment  additions  to support the Company's  growth,  the
addition  of back-up infrastructure, the upgrade to  its  e-
commerce platform, and the maintenance of existing assets in
fiscal 2007.  Net cash provided by financing activities  was
$685,000 and $1,016,000 for the fiscal years ended March 31,
2007 and 2006, respectively.  This $331,000 decrease can  be
attributed  to  a  decrease in the number of  stock  options
exercised in fiscal 2007 compared to fiscal 2006.


                                  19
<PAGE>


   As  of  March  31,  2007  and 2006  the  Company  had  no
outstanding lease commitments except for the lease  for  its
executive  offices  and warehouse.   On  May  18,  2005  the
Company  signed  an  amendment to extend the  current  lease
agreement  through  May 31, 2009.  The amendment  terms  are
similar  to  the existing lease agreement, and  the  Company
exercised  its  option to lease an additional  3,600  square
feet.   On November 28, 2005 the Company signed an amendment
to its current lease agreement, to lease an additional 7,000
square  feet  to  expand its warehouse and  pharmacy.   This
addition  to  the  warehouse and pharmacy was  necessary  to
increase   the   Company's  capacity  to  store   additional
inventory and expand its fulfillment operations. The Company
had  financed  certain equipment  acquisitions  with capital
leases.

  Presently, the Company has approximately $500,000  planned
for capital expenditure commitments to further the Company's
growth during fiscal 2008, which will be funded through cash
from  operations.  The Company's source of  working  capital
includes  cash  from operations and the  exercise  of  stock
options.   The  Company  presently has  no  need  for  other
alternative sources of working capital and at this time, has
no commitments or plans to obtain additional capital.  If in
the  future  the  Company seeks to raise additional  capital
through the sale of equity securities, no assurances can  be
given  that  the  Company  will be successful  in  obtaining
additional  capital, or that such capital will be  available
in  terms acceptable to the Company.  Further, there can  be
no  assurances  that  even  if such  additional  capital  is
obtained  the Company will sustain profitability or positive
cash flow.

Recent Accounting Pronouncements

  In  June  2006,  the Financial Accounting Standards  Board
("FASB") issued FASB Interpretation No. 48, "Accounting  for
Uncertainty  in  Income  Taxes - an interpretation  of  FASB
Statement  No. 109" ("FIN 48"), which provides criteria  for
the  recognition, measurement, presentation, and  disclosure
of uncertain tax positions.  A tax benefit from an uncertain
position  may be recognized only if it is "more likely  than
not" that the position is sustainable based on its technical
merits.   The  provisions of FIN 48 were effective  for  the
Company's  fiscal year beginning April 1, 2007.  We  do  not
expect   FIN  48  will  have  a  material  effect   on   our
consolidated  financial position, results of operations,  or
cash flows.

  In  June  2006,  the  FASB's Emerging  Issues  Task  Force
("EITF")  reached a consensus on Issue No. 06-3, "How  Taxes
Collected   from  Customers  and  Remitted  to  Governmental
Authorities  Should  be Presented in  the  Income  Statement
(That  Is,  Gross versus Net Presentation)."  The  scope  of
EITF  06-3 includes sales, use, value added, and some excise
taxes  that  are  assessed  by a governmental  authority  on
specific revenue-producing transactions between a seller and
customer.   EITF 06-3 requires disclosure of the  method  of
accounting for the applicable assessed taxes and the  amount
of  assessed taxes that are included in revenues if they are
accounted  for  under  the  gross  method.   EITF  06-3   is
effective for the Company's fiscal year beginning  April  1,
2007.   EITF  06-3 will not impact the method for  recording
these   taxes   in  the  Company's  consolidated   financial
statements  as the Company historically has presented  sales
excluding these taxes.

  In  September 2006, the Securities and Exchange Commission
("SEC")  issued Staff Accounting Bulletin ("SAB")  No.  108,
"Considering  the  Effects of Prior Year Misstatements  when
Quantifying   Misstatements  in   Current   Year   Financial
Statements."  SAB 108 provides guidance on the consideration
of  effects  of the prior year misstatements in  quantifying
current  year misstatements for the purpose of a materiality
assessment.    The  SEC  staff  believes  registrants   must
quantify  errors  using  both a  balance  sheet  and  income
statement  approach  and  evaluate whether  either  approach
results  in  quantifying  a  misstatement  that,  when   all
relevant   quantitative   and   qualitative   factors    are
considered, is material.  SAB 108 is effective for the first
annual  period  ending after November 15,  2006  with  early
application  encouraged.  The  Company  adopted  SAB  108 in
fiscal 2007.

  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.




                                  20
<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  Market risk generally represents the risk that losses  may
occur  in the value of financial instruments as a result  of
movements  in  interest  rates,  foreign  currency  exchange
rates,  and  commodity  prices.  Our  financial  instruments
include  cash  and cash equivalents, temporary  investments,
accounts  receivable, accounts payable, line of credit,  and
debt  obligations.   The book values  of  cash  equivalents,
temporary  investments,  accounts receivable,  and  accounts
payable  are considered to be representative of  fair  value
because  of  the  short maturity of these  instruments.   At
March 31, 2007, we had no debt obligations.

  We  do  not  utilize  financial  instruments  for  trading
purposes  and  we  do  not  hold  any  derivative  financial
instruments that could expose us to significant market risk.
The  Company  has  no material exposure to market  risk  for
changes in interest rates.

  The  above  sensitivity analysis for  interest  rate  risk
excludes accounts receivable, accounts payable, and  accrued
liabilities  because  of  the short-term  maturity  of  such
instruments.  The analysis does not consider the effect this
movement  may have on other variables including  changes  in
revenue  volumes  that  could be  indirectly  attributed  to
changes  in  interest  rates.  The actions  that  management
would  take  in  response to such  a  change  are  also  not
considered.   If it were possible to quantify  this  impact,
the  results  could well be different than  the  sensitivity
effects shown above.









                                  21
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

              PETMED EXPRESS, INC. AND SUBSIDIARIES

           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                       Page
                                                                       ----

Report of Independent Registered Public Accounting Firm                 23

Consolidated Balance Sheets as of March 31, 2007 and March 31, 2006     24

Consolidated Statements of Income for each of the three
   years in the period ended March 31, 2007                             25

Consolidated Statements of Changes in Shareholders' Equity
   for each of the three years in the period ended March 31, 2007       26

Consolidated Statements of Cash Flows for each of the three
   years in the period ended March 31, 2007                             27

Notes to Consolidated Financial Statements                              28

Report of Management on Internal Control Over Financial Reporting       39

Report of Independent Registered Public Accounting Firm on
   Internal Control Over Financial Reporting                            40














                                  22
<PAGE>



     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholders
PetMed Express, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets
of  PetMed Express, Inc. and Subsidiaries (the "Company") as
of  March  31,  2007 and 2006, and the related  consolidated
statements  of income, changes in shareholders'  equity  and
cash  flows for each of the three years in the period  ended
March 31, 2007.  These consolidated financial statements are
the   responsibility  of  the  Company's  management.    Our
responsibility   is   to  express  an   opinion   on   these
consolidated financial statements based on our audits.

We  conducted our audits in accordance with the standards of
the   Public  Company  Accounting  Oversight  Board  (United
States).   Those standards require that we plan and  perform
the  audit to obtain reasonable assurance about whether  the
financial statements are free of material misstatement.   An
audit   includes  examining,  on  a  test  basis,   evidence
supporting  the  amounts and disclosures  in  the  financial
statements.  An audit also includes assessing the accounting
principles   used   and  significant   estimates   made   by
management,  as  well  as evaluating the  overall  financial
statement presentation.  We believe that our audits  provide
a reasonable basis for our opinion.

In   our  opinion,  the  consolidated  financial  statements
referred  to above present fairly, in all material respects,
the  consolidated financial position of PetMed Express, Inc.
and  Subsidiaries  as of March 31, 2007 and  2006,  and  the
results of their operations and their cash flows for each of
the  three  years  in the period ended March  31,  2007,  in
conformity with accounting principles generally accepted  in
the United States of America.

As  discussed  in  Note  1  to  the  consolidated  financial
statements,  the  Company changed the  manner  in  which  it
accounts  for  share-based compensation effective  April  1,
2006.

We  have  also audited, in accordance with the standards  of
the   Public  Company  Accounting  Oversight  Board  (United
States), the effectiveness of the Company's internal control
over  financial  reporting as of March 31,  2007,  based  on
criteria    established   in   Internal   Control-Integrated
Framework    issued   by   the   Committee   of   Sponsoring
Organizations  of the Treadway Commission  (COSO),  and  our
report  dated May 31, 2007 expressed an unqualified  opinion
thereon.



/s/ Goldstein Golub Kessler LLP
-------------------------------
Goldstein Golub Kessler LLP

New York, New York
May 31, 2007




                                  23
<PAGE>

<TABLE>
<CAPTION>
               PETMED EXPRESS, INC. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS

                                                                                 March 31,
                                                                          2007             2006
                                                                     -------------    -------------
                                  ASSETS
                                  ------
<S>                                                                  <C>              <C>
Current assets:
  Cash and cash equivalents                                          $     316,470    $     366,907
  Temporary investments                                                 39,125,000       22,850,000
  Accounts receivable, less allowance for doubtful
    accounts of $28,000 and $23,000, respectively                        1,369,521        1,155,781
  Inventories - finished goods                                          16,086,207       14,997,675
  Prepaid expenses and other current assets                              1,071,171          583,038
                                                                     -------------    -------------
Total current assets                                                    57,968,369       39,953,401

  Property and equipment, net                                            1,990,578        1,497,589
  Deferred income taxes                                                    894,540          794,002
  Intangible asset                                                         365,000          365,000
  Other assets                                                                   -           14,167
                                                                     -------------    -------------

Total assets                                                         $  61,218,487    $  42,624,159
                                                                     =============    =============
                   LIABILITIES AND SHAREHOLDERS' EQUITY
                   ------------------------------------

Current liabilities:
  Accounts payable                                                   $   5,859,756    $   3,052,953
  Income taxes payable                                                     229,321          958,318
  Accrued expenses and other current liabilities                         1,265,837          973,359
                                                                     -------------    -------------

Total liabilities                                                        7,354,914        4,984,630
                                                                     -------------    -------------
Commitments and contingencies

Shareholders' equity:
  Preferred stock, $.001 par value, 5,000,000 shares authorized;
    2,500 convertible shares issued and outstanding with a
    liquidation preference of $4 per share                                   8,898            8,898
  Common stock, $.001 par value, 40,000,000 shares authorized;
    24,309,417 and 23,967,390 shares issued and outstanding,
    respectively                                                            24,309           23,967
  Additional paid-in capital                                            15,213,254       13,433,054
  Retained earnings                                                     38,617,112       24,173,610
                                                                     -------------    -------------

     Total shareholders' equity                                         53,863,573       37,639,529
                                                                     -------------    -------------

Total liabilities and shareholders' equity                           $  61,218,487    $  42,624,159
                                                                     =============    =============
</TABLE>

See accompanying notes to consolidated financial statements.


                                  24
<PAGE>

<TABLE>
<CAPTION>
              PETMED EXPRESS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF INCOME

                                                                   Year Ended March 31,
                                                            2007            2006            2005
                                                      --------------  --------------  --------------
<S>                                                   <C>             <C>             <C>
 Sales                                                $  162,246,407  $  137,583,155  $  108,357,747
 Cost of sales                                            97,680,238      83,244,366      64,700,002
                                                      --------------  --------------  --------------

 Gross profit                                             64,566,169      54,338,789      43,657,745
                                                      --------------  --------------  --------------
 Operating expenses:
      General and administrative                          17,292,675      14,078,343      11,396,320
      Advertising                                         25,243,029      21,570,667      19,185,982
      Depreciation and amortization                          530,440         544,535         573,817
                                                      --------------  --------------  --------------
 Total operating expenses                                 43,066,144      36,193,545      31,156,119
                                                      --------------  --------------  --------------

 Income from operations                                   21,500,025      18,145,244      12,501,626
                                                      --------------  --------------  --------------
 Other income (expense):
      Interest income, net                                 1,266,150         676,083          98,079
      Other, net                                             435,824         215,586           3,710
      Loss on disposal of property and equipment              (1,250)         (1,719)              -
                                                      --------------  --------------  --------------
 Total other income (expense)                              1,700,724         889,950         101,789
                                                      --------------  --------------  --------------

 Income before provision for income taxes                 23,200,749      19,035,194      12,603,415

 Provision for income taxes                                8,757,247       6,971,680       4,593,045
                                                      --------------  --------------  --------------

 Net income                                           $   14,443,502  $   12,063,514  $    8,010,370

 Net income per common share:                         ==============  ==============  ==============

       Basic                                          $         0.60  $         0.51  $         0.35
                                                      ==============  ==============  ==============
       Diluted                                        $         0.60  $         0.50  $         0.34
                                                      ==============  ==============  ==============
 Weighted average number of common shares outstanding:
       Basic                                              24,109,035      23,658,722      22,862,417
                                                      ==============  ==============  ==============
       Diluted                                            24,270,879      24,211,955      23,833,189
                                                      ==============  ==============  ==============
</TABLE>

See accompanying notes to consolidated financial statements.


                                  25
<PAGE>

<TABLE>
<CAPTION>
                PETMED EXPRESS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

 Fiscal years ended March 31, 2005, March 31, 2006 and March 31, 2007


                                       Convertible            Common             Additional
                                    Preferred Stock           Stock                Paid-In        Retained
                                  -----------------     ---------------------
                                  Shares    Amounts     Shares        Amounts      Capital        Earnings          Total
                                  ------------------------------------------------------------------------------------------
<S>                               <C>      <C>        <C>           <C>         <C>             <C>            <C>
Balance, March 31, 2004            2,500   $  8,898   21,860,057    $  21,860   $   9,864,025   $  4,099,726   $  13,994,509

   Issuance of common stock from
     exercise of stock options         -          -    1,058,668        1,059       1,076,130              -       1,077,189
   Issuance of common stock from
     exercise of warrants and other    -          -      540,000          540         215,707              -         216,247

   Tax benefit related to stock
     options exercised                 -          -            -            -         918,749              -         918,749

   Net income                          -          -            -            -               -      8,010,370       8,010,370
                                  ------   --------   ----------    ---------   -------------   ------------   -------------

Balance, March 31, 2005            2,500   $  8,898   23,458,725    $  23,459   $  12,074,611   $ 12,110,096   $  24,217,064

   Issuance of common stock from
     exercise of stock options         -          -      508,665          508       1,015,523              -       1,016,031

   Tax benefit related to stock
     options exercised                 -          -            -            -         342,920              -         342,920

   Net income                          -          -            -            -               -     12,063,514      12,063,514
                                  ------   --------   ----------    ---------   -------------   ------------   -------------

Balance, March 31, 2006            2,500   $  8,898   23,967,390    $  23,967   $  13,433,054   $ 24,173,610   $  37,639,529

   Issuance of common stock from
     exercise of stock options         -          -      185,402          185         441,899              -         442,084

   Issuance of restricted stock        -          -      156,625          157            (157)             -               -

   Share based compensation            -          -            -            -       1,095,740              -       1,095,740

   Tax benefit related to stock
     options exercised                 -          -            -            -         242,718              -         242,718

   Net income                          -          -            -            -               -     14,443,502      14,443,502
                                  ------   --------   ----------    ---------   -------------   ------------   -------------

Balance, March 31, 2007            2,500   $  8,898   24,309,417    $  24,309   $  15,213,254   $ 38,617,112   $  53,863,573
                                  ======   ========   ==========    =========   =============   ============   =============
</TABLE>

See accompanying notes to consolidated financial statements.


                                  26
<PAGE>

<TABLE>
<CAPTION>
             PETMED EXPRESS, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                        Year Ended March 31,
                                                                 2007           2006           2005
                                                            -------------  -------------  -------------
                                                            <S>            <C>            <C>
 Cash flows from operating activities:
     Net income                                             $  14,443,502  $  12,063,514  $   8,010,370
    Adjustments to reconcile net income to net cash
     provided by operating activities:
      Depreciation and amortization                              530,440        544,535        573,817
      Share based compensation                                 1,095,740              -              -
      Tax benefit related to stock options exercised                   -        342,920        918,749
      Deferred income taxes                                     (100,538)      (211,156)        (1,490)
      Loss on disposal of property and equipment                   1,250          1,719              -
      Bad debt expense (recovery)                                 29,554         (1,709)        16,092
      (Increase) decrease in operating assets
        and increase (decrease) in liabilities:
          Accounts receivable                                   (243,294)       642,684       (679,547)
          Inventories - finished goods                        (1,088,532)    (3,817,342)          (475)
          Prepaid expenses and other current assets             (488,133)      (369,886)        19,066
          Other assets                                            14,167              -          7,655
          Accounts payable                                     2,806,803        327,963       (548,072)
          Income taxes payable                                  (728,997)       356,783        179,090
          Accrued expenses and other current liabilities         292,478        397,465       (146,456)
                                                           -------------  -------------  -------------
 Net cash provided by operating activities                    16,564,440     10,277,490      8,348,799
                                                           -------------  -------------  -------------
 Cash flows from investing activities:
    Net change in temporary investments                      (16,275,000)   (11,050,000)   (11,800,000)
    Purchases of property and equipment                       (1,025,079)      (758,176)      (171,757)
    Net proceeds from the sale of property and equipment             400            600              -
                                                           -------------  -------------  -------------
 Net cash used in investing activities                       (17,299,679)   (11,807,576)   (11,971,757)
                                                           -------------  -------------  -------------
 Cash flows from financing activities:
    Proceeds from the exercise of stock options and warrants
       and other transactions                                    442,084      1,016,031      1,293,436
    Tax benefit related to stock options exercised               242,718              -              -
    Payments on the loan obligation                                    -              -        (68,442)
                                                           -------------  -------------  -------------
 Net cash provided by financing activities                       684,802      1,016,031      1,224,994
                                                           -------------  -------------  -------------
 Net decrease in cash and cash equivalents                       (50,437)      (514,055)    (2,397,964)
 Cash and cash equivalents, at beginning of the year             366,907        880,962      3,278,926
                                                           -------------  -------------  -------------
 Cash and cash equivalents, at end of year                 $     316,470  $     366,907  $     880,962
                                                           =============  =============  =============
 Supplemental disclosure of cash flow information:

    Cash paid for interest                                 $           -  $           -  $         884
                                                           =============  =============  =============
    Cash paid for income taxes                             $   9,344,063  $   6,483,132  $   3,496,696
                                                           =============  =============  =============
</TABLE>
See accompanying notes to consolidated financial statements.


                                  27
<PAGE>


           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 and sells  prescription
     and  non-prescription pet medications and other  health
     products  for  dogs,  cats, and horses  direct  to  the
     consumer.

     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, increase  traffic  on  its
     website  at www.1800petmeds.com, acquire new customers,
                 -------------------
     and maximize repeat purchases.  The majority of all  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.  References herein to fiscal 2007,  2006,
     or 2005 refer to the Company's fiscal years ended March
     31, 2007, 2006 and 2005, respectively.

     Principles of Consolidation

     The   consolidated  financial  statements  include  the
     accounts  of  the  Company and  its  two  wholly  owned
     subsidiaries.      All     significant     intercompany
     transactions have been eliminated in consolidation.

     Revenue Recognition

     The Company generates revenue by selling pet medication
     products primarily to retail consumers and minimally to
     wholesale  customers.   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 consumer.  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   the  accounts  receivable   balances
     relative  to sales.  The Company maintains an allowance
     for  doubtful  accounts  for losses  that  the  Company
     estimates  will arise from the 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.  At March 31,  2007  and
     2006,   the   allowance  for  doubtful   accounts   was
     approximately $28,000 and $23,000, respectively.

     Cash and Cash Equivalents

     The  Company  considers all highly  liquid  investments
     with maturity of three months or less when purchased to
     be  cash  equivalents.  Cash and  cash  equivalents  at
     March  31,  2007 and 2006, consisted of  the  Company's
     cash  accounts,  overnight repurchase  agreements,  and
     short-term investments with a maturity of three  months
     or  less.   The  carrying amount  of  cash  equivalents
     approximates  fair  value.  The Company  maintains  its
     cash  in  bank  deposit accounts which, at  times,  may
     exceed  federally insured limits.  The Company has  not
     experienced any losses in such accounts.

     Temporary Investments

     The   Company   has  reclassified  its   auction   rate
     securities  ("ARS") from cash and cash  equivalents  to
     temporary   investments  on  its   balance   sheet   in
     accordance with recent accounting pronouncements.  This
     reclassification  affected both the  balance  sheet  in
     fiscal  2006 and 2007 and cash flow statement in fiscal
     2005,  2006, and 2007, it did not affect net income  or
     working  capital  in fiscal 2005, 2006,  or  2007.   In
     accordance  with Staff Accounting Bulletin ("SAB")  No.
     108,   "Considering   the   Effects   of   Prior   Year
     Misstatements when Quantifying Misstatements in Current
     Year  Financial  Statements," no changes  to  financial
     statements issued in prior years were deemed necessary.
     In   accordance   with  the  Statement   of   Financial
     Accounting  Standards ("SFAS") No. 115, Accounting  for
     Certain  Investments  in  Debt and  Equity  Securities,
     temporary  investments  are accounted  for  as  trading
     securities.  Trading securities are securities that are
     bought  and held principally for the purpose of selling
     in  the  near  term.  The Company has not  changed  its
     investment   policy.    The   Company   believes   that
     notwithstanding  the reclassification, the  investments
     in  ARS  are:  short  term and highly  liquid,  readily
     convertible  to known amounts of cash, and  present  an
     insignificant  risk of change in value  due  to  market
     changes in interest rates.


                                  28
<PAGE>


           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies (Continued)


     Use of Estimates

     The preparation of consolidated financial statements in
     conformity   with   accounting   principles   generally
     accepted  in  the  United States  of  America  requires
     management  to  make  estimates  and  assumptions  that
     affect  the  reported amounts of assets and liabilities
     and disclosure of contingent assets and liabilities  at
     the  date of the consolidated financial statements  and
     the  reported  amounts of revenues and expenses  during
     the reporting period.  Actual results could differ from
     those estimates.

     Inventories

     Inventories   consist   of   prescription   and    non-
     prescription pet medications and pet supplies that  are
     available for sale and are priced at the lower of  cost
     or  market value using a weighted average cost  method.
     The  Company  writes down its inventory  for  estimated
     obsolescence.   The inventory reserve was approximately
     $122,000  and  $306,000 at March  31,  2007  and  2006,
     respectively.

     Property and Equipment

     Property   and  equipment  are  stated  at   cost   and
     depreciated  using the straight-line  method  over  the
     estimated  useful lives of the assets.  The  furniture,
     fixtures,   equipment,   and  computer   software   are
     depreciated  over periods ranging from three  to  seven
     years.  Leasehold improvements and assets under capital
     lease agreements are amortized over the shorter of  the
     underlying  lease agreement or the useful life  of  the
     asset.

     Long-lived Assets

     Long-lived assets are reviewed for impairment  whenever
     events  or changes in circumstances indicate  that  the
     carrying amount may not be recoverable.  Recoverability
     of  assets is measured by a comparison of the  carrying
     amount  of the asset to net future cash flows  expected
     to be generated from the asset.

     Intangible Asset

     The  intangible asset consists of a toll-free telephone
     number.  In accordance with  SFAS No. 142, Goodwill and
     Other  Intangible Assets, the intangible asset  is  not
     being amortized, and is subject to an annual review for
     impairment.

     Advertising

     The  Company's advertising expenses consists  primarily
     of  television  advertising,  internet  marketing,  and
     direct  mail/print advertising.  Television  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    catalog   and   postcards   are    produced,
     distributed, or superseded.

     Fair Value of Financial Instruments

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

     Comprehensive Income

     The   Company   applies   SFAS   No.   130,   Reporting
     Comprehensive  Income, which requires  that  all  items
     that  are  recognized  under  accounting  standards  as
     components  of  comprehensive income be reported  in  a
     financial  statement that is displayed  with  the  same
     prominence as other financial statements. The items  of
     other  comprehensive income that are typically required
     to  be  displayed are foreign currency  items,  minimum
     pension liability adjustments, and unrealized gains and
     losses  on  certain  investments  in  debt  and  equity
     securities.  There were no items of other comprehensive
     income for any periods presented herein.


                                  29
<PAGE>


           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies (Continued)

     Income Taxes

     The   Company  accounts  for  income  taxes  under  the
     provisions  of  SFAS  No. 109,  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.

     Accounting for Share Based Compensation

     Stock Options

     Effective  April  1, 2006, the Company began  recording
     compensation expense associated with stock  options  in
     accordance  with SFAS No. 123R, "Share Based  Payment,"
     which is a revision of SFAS No. 123.  Prior to April 1,
     2006,    the    Company   accounted   for   stock-based
     compensation  related  to  stock  options   under   the
     recognition  and measurement principles  of  Accounting
     Principles  Board Opinion ("APB") No.  25,  "Accounting
     for  Stock  Issued  to Employees."  At  that  time  the
     Company  measured compensation expense  for  its  stock
     option plans using the intrinsic value method, that is,
     as  the excess, if any, of the fair market value of the
     Company's  stock  at  the grant date  over  the  amount
     required  to be paid to acquire the stock, and provided
     the  disclosures required by SFAS Nos. 123 and 148. The
     Company has adopted the modified prospective transition
     method  provided under SFAS No. 123R, and as a  result,
     has  not  retroactively  adjusted  results  from  prior
     periods.   Under  this transition method,  compensation
     expense associated with stock options recognized in the
     first  quarter  of fiscal year 2007, and in  subsequent
     quarters, includes: 1) expense related to the remaining
     unvested  portion  of all stock option  awards  granted
     prior  to  April 1, 2006, based on the grant date  fair
     value   estimated  in  accordance  with  the   original
     provisions  of SFAS No. 123; and 2) expense related  to
     all   stock   option  awards  granted,   or   modified,
     subsequent  to April 1, 2006, based on the  grant  date
     fair  value estimated in accordance with the provisions
     of SFAS No. 123R.

     As  a  result  of the adoption of SFAS  No.  123R,  the
     Company's net income for the year ended March 31,  2007
     includes   $893,000  of  compensation   expense.    The
     compensation  expense related to all of  the  Company's
     stock-based compensation arrangements is recorded as  a
     component of general and administrative expenses.

     For  stock options granted prior to April 1, 2006,  the
     estimated  fair value of each option award granted  was
     determined on the date of grant using the Black-Scholes
     option valuation model.  For stock option grants on and
     after  April 1, 2006, the estimated fair value of  each
     option award granted will be determined on the date  of
     grant using the Black-Scholes option-pricing model or a
     lattice-based  option valuation model.  The  per  share
     weighted-average  fair value of stock  options  granted
     during  fiscal  2006  and 2005  was  $3.51  and  $5.45,
     respectively,  on  the date of grant using  the  Black-
     Scholes option-pricing model, as prescribed by SFAS No.
     123,  with  the following weighted-average assumptions:
     no  dividend  yield; risk-free interest  rates  ranging
     from  4 to 6 percent; expected lives of 3-5 years,  and
     expected  volatility  of  66 percent  and  86  percent,
     respectively.  The risk-free interest rates for  fiscal
     2006 and 2005 were based on the prime interest rate  at
     the  date of grant.  The expected volatility was  based
     on  the  historical volatility of the Company's  stock.
     No  assumptions were necessary for fiscal 2007, due  to
     the  fact that no stock options were granted during the
     year.






                                  30
<PAGE>


           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies (Continued)

     The following table illustrates the pro forma effect on
     net  income  and earnings per common share  as  if  the
     Company   has   applied  the  fair  value   recognition
     provisions of SFAS No. 123, as amended by SFAS No. 148,
     and related interpretations in accounting for its stock
     options  in  determining stock-based  compensation  for
     awards under the plan:



<TABLE>
<CAPTION>

   Year Ended March 31,                                      2006           2005
   --------------------                                -------------  -------------
   <S>                                                 <C>            <C>
   Reported net income:                                $  12,063,514  $   8,010,370

   Deduct: total stock-based employee compensation
   expense determined under fair-value based method
   for all awards, net of related tax effects                596,434        501,244
                                                       -------------  -------------

   Pro forma net income:                               $  11,467,080  $   7,509,126
                                                       =============  =============

   Reported basic net income per share:                $        0.51  $        0.35
                                                       =============  =============

   Pro forma basic net income per share:               $        0.48  $        0.33
                                                       =============  =============

   Reported diluted net income per share:              $        0.50  $        0.34
                                                       =============  =============

   Pro forma diluted net income per share:             $        0.48  $        0.32
                                                       =============  =============
</TABLE>

     Restricted Stock

     On  July  28,  2006,  the Company received  shareholder
     approval  for the adoption of the 2006 Employee  Equity
     Compensation  Restricted  Stock  Plan  (the   "Employee
     Plan")   and   the   2006   Outside   Director   Equity
     Compensation  Restricted  Stock  Plan  (the   "Director
     Plan").   The  purpose of the plans is to  promote  the
     interests of the Company by securing and retaining both
     employees  and  outside  directors.   The  Company  has
     reserved  1,000,000 shares of common stock for issuance
     under  the  Employee  Plan.  The Company  has  reserved
     200,000  shares of common stock for issuance under  the
     Director  Plan.  The value of the restricted  stock  is
     determined  based  on the market value  of  the  common
     stock at the issuance date.  The restriction period  or
     forfeiture period is determined by the Company's Board,
     to  be  no less than 1 year and no more than ten years.
     The Company had 136,625 restricted common shares issued
     under  the  Employee Plan and 20,000 restricted  common
     shares  issued  under the Director Plan  at  March  31,
     2007, the fair value of which is being amortized over a
     three-year period.  For the year ended March  31,  2007
     the Company recognized $203,000 of compensation expense
     related  to  the  Employee  and  Director  Plans.   The
     compensation  expense related to all of  the  Company's
     stock-based compensation arrangements is recorded as  a
     component  of general and administrative expenses.   At
     March  31,  2007, there was $1,668,000 of  unrecognized
     compensation cost related to the non-vested  restricted
     stock  awards, which is expected to be recognized  over
     the  remaining weighted average vesting period of  2.70
     years.

     Recent Accounting Pronouncements

     In  June 2006, the Financial Accounting Standards Board
     ("FASB") issued FASB Interpretation No. 48, "Accounting
     for Uncertainty in Income Taxes - an interpretation  of
     FASB  Statement  No.  109" ("FIN 48"),  which  provides
     criteria     for    the    recognition,    measurement,
     presentation,   and   disclosure   of   uncertain   tax
     positions.   A  tax benefit from an uncertain  position
     may  be recognized only if it is "more likely than not"
     that the position is sustainable based on its technical
     merits.   The  provisions of FIN 48 were effective  for
     the Company's fiscal year beginning April 1, 2007.   We
     do not expect FIN 48 will have a material effect on our
     consolidated financial position, results of  operations
     or cash flows.


                                  31
<PAGE>




           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies (Continued)


     In  June  2006, the FASB's Emerging Issues  Task  Force
     ("EITF")  reached a consensus on Issue No.  06-3,  "How
     Taxes   Collected  from  Customers  and   Remitted   to
     Governmental  Authorities Should be  Presented  in  the
     Income   Statement   (That   Is,   Gross   versus   Net
     Presentation)."  The scope of EITF 06-3 includes sales,
     use,  value  added,  and  some excise  taxes  that  are
     assessed   by  a  governmental  authority  on  specific
     revenue-producing  transactions between  a  seller  and
     customer.  EITF 06-3 requires disclosure of the  method
     of accounting for the applicable assessed taxes and the
     amount  of assessed taxes that are included in revenues
     if they are accounted for under the gross method.  EITF
     06-3   is  effective  for  the  Company's  fiscal  year
     beginning April 1, 2007.  EITF 06-3 will not impact the
     method  for  recording  these taxes  in  the  Company's
     consolidated  financial  statements  as   the   Company
     historically has presented sales excluding these taxes.

     In   September   2006,  the  Securities  and   Exchange
     Commission  ("SEC")  issued Staff  Accounting  Bulletin
     ("SAB") No. 108, "Considering the Effects of Prior Year
     Misstatements when Quantifying Misstatements in Current
     Year  Financial Statements."  SAB 108 provides guidance
     on  the  consideration of effects  of  the  prior  year
     misstatements in quantifying current year misstatements
     for  the purpose of a materiality assessment.  The  SEC
     staff  believes registrants must quantify errors  using
     both a balance sheet and income statement approach  and
     evaluate whether either approach results in quantifying
     a misstatement that, when all relevant quantitative and
     qualitative  factors are considered, is material.   SAB
     108  is  effective for the first annual  period  ending
     after   November   15,  2006  with  early   application
     encouraged. The Company adopted SAB 108 in fiscal 2007.

     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.

(2)  Temporary Investments

     The following is a summary of trading securities:

                                              March 31,
                                          2007           2006
                                    -------------  -------------
       Trading Securities           $  39,125,000  $  22,850,000
                                    -------------  -------------
       Total temporary investments  $  39,125,000  $  22,850,000
                                    =============  =============

(3)  Property and Equipment

     Major classifications of property and equipment consist
of the following:


                                                             March 31,
                                                        2007         2006
                                                    -----------  -----------
    Leasehold improvements                          $   428,768  $   409,164
    Computer software                                   945,356      427,447
    Furniture, fixtures and equipment                 2,942,461    2,456,695
                                                    -----------  -----------
                                                      4,316,585    3,293,306
    Less: accumulated depreciation and amortization  (2,326,007)  (1,795,717)
                                                    -----------  -----------
    Property and equipment, net                     $ 1,990,578  $ 1,497,589
                                                    ===========  ===========

                                  32
<PAGE>


           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4)  Accrued Expenses and Other Liabilities

     Major  classifications of accrued  expenses  and  other
liabilities consist of the following:


                                                   March 31,
                                              2007          2006
                                          -----------   -----------
  Accrued credit card fees                $   285,972   $   232,022
  Accrued salaries and benefits               266,002       170,846
  Accrued professional expenses               212,500       300,500
  Accrued advertising expenses                173,000        99,000
  Other accrued liabilities                   328,363       170,991
                                          -----------   -----------

   Accrued expenses and other liabilities $ 1,265,837   $   973,359
                                          ===========   ===========

(5)  Shareholders' Equity

     Preferred Stock

     In April 1998, the Company issued 250,000 shares of its
     $.001 par value preferred stock at a price of $4.00 per
     share, less issuance costs of $112,187.  Each share  of
     the  preferred  stock is convertible into approximately
     4.05  shares  of  common stock at the election  of  the
     shareholder.   The shares have a liquidation  value  of
     $4.00  per  share  and may pay dividends  at  the  sole
     discretion  of  the  Company.   The  Company  does  not
     anticipate   paying   dividends   to   the    preferred
     shareholders in the foreseeable future.  Each share  of
     preferred stock is entitled to one vote on all  matters
     submitted to a vote of shareholders of the Company.  As
     of  March  31,  2007  and 2006,  2,500  shares  of  the
     convertible  preferred stock remained  unconverted  and
     outstanding.

(6)  Income Taxes

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






                                                March 31,
                                           2007           2006
                                       -----------    -----------
 Deferred tax assets:
    Bad debt and inventory reserves    $    57,779    $   123,991
    Accrued expenses                       227,841        233,644
    Deferred stock compensation            154,951              -
    Net operating loss carryforward      1,065,092      1,139,232
                                       -----------    -----------

 Deferred tax assets                     1,505,663      1,496,867
 Less: valuation allowance                (551,340)      (638,066)
                                       -----------    -----------

 Total deferred tax assets                 954,323        858,801

 Deferred tax liabilities:
    Depreciation                           (59,783)       (64,799)
                                       -----------    -----------

 Total net deferred taxes              $   894,540    $   794,002
                                       ===========    ===========


     The  change  in the valuation allowance for  the  years
     ended March 31, 2007 and 2006 was approximately $87,000
     and  $79,000,  respectively.  At March  31,  2007,  the
     Company   had  net  operating  loss  carryforwards   of
     approximately  $2,761,093.   The  net  operating   loss
     carryforwards  expire in the years 2013  through  2020.
     The  use  of  such net operating loss carryforwards  is
     limited  to approximately $266,000 annually  due  to  a
     change of control on November 22, 2000.



                                  33
<PAGE>


           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6)  Income Taxes (Continued)

     The  components of the income tax provision consist  of
     the following:


                                             Year Ended March 31,
                                      2007           2006           2005
                                  -----------    -----------    -----------
Current taxes
     Federal                      $ 7,594,848    $ 6,114,087    $ 3,911,564
     State                          1,262,937      1,046,607        682,971
                                  -----------    -----------    -----------
Total current taxes                 8,857,785      7,160,694      4,594,535
                                  -----------    -----------    -----------
Deferred taxes
     Federal                          (86,204)      (161,388)        (1,490)
     State                            (14,334)       (27,626)             -
                                  -----------    -----------    -----------
Total deferred taxes                 (100,538)      (189,014)        (1,490)
                                  -----------    -----------    -----------

Total provision for income taxes  $ 8,757,247    $ 6,971,680    $ 4,593,045
                                  ===========    ===========    ===========



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

<TABLE>
<CAPTION>
                                                             Year Ended March 31,
                                                     2007           2006           2005
                                                 -----------    -----------    -----------
<S>                                              <C>            <C>            <C>
Income taxes at U.S. statutory rates             $ 8,120,262    $ 6,471,966    $ 4,285,161
State income taxes, net of federal tax benefit       829,427        690,978        457,504
Permanent differences                               (226,620)      (186,470)         9,178
Other                                                120,904         74,689        (72,445)
Change in valuation allowance                        (86,726)       (79,483)       (86,353)
                                                 -----------    -----------    -----------

Total provision for income taxes                 $ 8,757,247    $ 6,971,680    $ 4,593,045
                                                 ===========    ===========    ===========
</TABLE>


(7)  Stock Options and Warrants

     Stock Options Granted to Employees

     The Company established the 1998 Stock Option Plan (the
     "Plan") effective July 31, 1998, which provides for the
     issuance  of  qualified options  to  officers  and  key
     employees,   and  nonqualified  options  to  directors,
     consultants  and other service providers.  The  Company
     has  reserved  5,000,000 shares  of  common  stock  for
     issuance  under  the  Plan.   The  exercise  prices  of
     options  issued  under the Plan must  be  equal  to  or
     greater  than the market price of the Company's  common
     stock  as  of  the date of issuance.  The  Company  had
     665,768 and 851,170 options outstanding under the  Plan
     at  March  31,  2007  and 2006, respectively.   Options
     generally   vest  ratably  over  a  three-year   period
     commencing  on the first anniversary of the grant  with
     respect to options granted to employees under the Plan.
     The  1998  Plan expires on July 31, 2008.  In  addition
     the  Company  issued options prior to  July  31,  1998,
     which are not included in the Plan.









                                  34
<PAGE>



           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7)  Stock Options and Warrants (Continued)

     A  summary of the status of the Company's stock  option
     plan as of March 31, 2007 is as follows:
<TABLE>
<CAPTION>

                                                             Weighted-    Weighted-
                                                              Average      Average
                                                             Exercise     Remaining    Aggregate
                                                 Number of   Price per  Contractural   Intrinsic
                                                  Shares      Share     Term (years)     Value
                                               ----------    --------   ------------  -------------
<S>                                            <C>           <C>        <C>           <C>


Options outstanding at March 31, 2006             851,170    $  7.28

Options granted                                         -          -

Options exercised                                (185,402)      2.38

Options forfeited or expired                            -          -
                                               ----------    --------   ------------  -------------
Options outstanding at March 31, 2007             665,768    $  8.65        2.40      $  5,758,430
                                               ==========    ========   ============  =============
Options vested and exercisable at March 31, 2007  464,934    $  9.25        1.92      $  4,298,441
                                               ==========    ========   ============  =============
</TABLE>

     Cash  received from stock options exercised for  fiscal
     2007    and   2006   was   $442,000   and   $1,016,000,
     respectively.   The  income  tax  benefit  from   stock
     options exercised totaled $243,000 and $343,000 for the
     years ended March 31, 2007 and 2006, respectively.   At
     March   31,  2007  and  2006,  the  number  of  options
     exercisable was 464,934 and 390,834, respectively,  and
     the  weighted-average exercise price of  those  options
     was  $9.25  and $6.67, respectively.  Adjustments  were
     made for options forfeited prior to vesting.

     A  summary  of  the status of the Company's  non-vested
shares as of March 31, 2007 is presented below:

<TABLE>
<CAPTION>
                                                 Weighted-   Weighted-
                                                  Average     Average
                                                  Exercise   Remaining
                                     Number of   Price per   Contractural
                                      Shares       Share     Term (years)
                                    ---------   ----------  -------------
<S>                                 <C>         <C>         <C>

Non-vested shares at March 31, 2006   460,336   $   7.81

Options granted                             -          -

Options vested                       (259,502)      8.22

Options forfeited or expired                -          -
                                    ---------   ----------  -------------

Non-vested shares at March 31, 2007   200,834   $   7.27         3.52
                                    =========   ==========  =============
</TABLE>

     As   of  March  31,  2007,  there  was  $1,065,000   of
     unrecognized  compensation cost related  to  non-vested
     stock option awards, which is expected to be recognized
     over  a  remaining weighted average vesting  period  of
     2.25 years.

     Warrants

     On  November 22, 2000, Tricon Holdings, LLC, a  Florida
     limited   liability  corporation  ("Tricon"),  acquired
     10,000,000  shares  of  the  Company's  authorized  and
     unissued  shares  of  common  stock  and  warrants   to
     purchase  3,000,000 shares of the Company's  authorized
     and unissued shares of common stock.  The warrants were
     exercisable at $.33 per share and were assigned a value
     of  $601,260  using  the  Black-Scholes  option-pricing
     model, with the following weighted-average assumptions:
     dividend yield of 0.0 percent; risk-free interest rates
     of  6.00  percent;  expected lives of  3-5  years,  and
     expected  volatility of 91 percent.  As  of  March  31,
     2005  all  of the 3,000,000 warrants issued on November
     22, 2000 were exercised.


                                  35
<PAGE>


           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8)  Net Income Per Share

     In  accordance  with the provisions of  SFAS  No.  128,
     "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  stock options exercised and the  effects  of
     the   potential   conversion   of   preferred   shares,
     calculated    using   the   treasury   stock    method.
     Outstanding  stock  options and  convertible  preferred
     shares  issued  by  the  Company  represent  the   only
     dilutive  effect reflected in diluted weighted  average
     shares  outstanding.  The following is a reconciliation
     of  the  numerators and denominators of the  basic  and
     diluted  net  income  per share  computations  for  the
     periods presented:
<TABLE>
<CAPTION>
                                                          Year Ended March 31,
                                                 2007           2006           2005
                                            -------------  -------------  -------------
<S>                                         <C>            <C>            <C>
Net income (numerator):

  Net income                                $  14,443,502  $  12,063,514  $   8,010,370
                                            =============  =============  =============
Shares (denominator)

  Weighted average number of common shares
    outstanding used in basic computation      24,109,035     23,658,722     22,862,417
  Common shares issuable upon exercise
    of stock options and warrants                 151,719        543,108        960,647
  Common shares issuable upon conversion
    of preferred shares                            10,125         10,125         10,125
                                            -------------  -------------  -------------
  Shares used in diluted computation           24,270,879     24,211,955     23,833,189
                                            =============  =============  =============
Net income per common share:

  Basic                                     $        0.60  $        0.51  $        0.35
                                            =============  =============  =============
  Diluted                                   $        0.60  $        0.50  $        0.34
                                            =============  =============  =============
</TABLE>


     At  March  31, 2007 and 2006, all common stock  options
     were  included  in  the diluted net income  per  common
     share  computation as their exercise prices  were  less
     than the average market price of the common shares  for
     the  period.   At March 31, 2005, 485,500 common  stock
     options,  with  a  weighted average exercise  price  of
     $9.69,  were excluded from the diluted net  income  per
     share computation as their exercise prices were greater
     than the average market price of the common shares  for
     the  period, therefore the effect would have been anti-
     dilutive.

(9)  Valuation and Qualifying Accounts

      Activity  in  the Company's valuation  and  qualifying
accounts consists of the following:

<TABLE>
<CAPTION>
                                                            Year Ended March 31,
                                                     2007           2006           2005
                                                 -----------    -----------    -----------
<S>                                              <C>            <C>            <C>
Allowance for doubtful accounts:
   Balance at beginning of period                $    23,426    $    36,535    $    22,987
   Provision (recovery) for doubtful accounts         29,554         (1,709)        16,092
   Write-off of uncollectible accounts receivable    (25,253)       (11,400)        (2,544)
                                                 -----------    -----------    -----------
   Balance at end of period                      $    27,727    $    23,426    $    36,535
                                                 ===========    ===========    ===========
Valuation allowance for deferred tax assets:
   Balance at beginning of period                $   638,066    $   717,549    $   803,902
   (Deletions) / additions                           (86,726)       (79,483)       (86,353)
                                                 -----------    -----------    -----------

   Balance at end of period $                        551,340    $   638,066    $   717,549
                                                 ===========    ===========    ===========
</TABLE>


                                  36
<PAGE>



           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10) Commitments and Contingencies

     Legal Matters

     On  January 19, 2006, PetMed Express, Inc. was added as
     a  defendant in the matter of Yali Golan v. Marc  Puleo
     (former   President  and  Chairman  of  the  Board   of
     Directors  of the Company), filed in the Circuit  Court
     of  the Eleventh Judicial Circuit in and for Miami-Dade
     County, Florida.  On March 6, 2006, the Company filed a
     motion  to dismiss all counts of the complaint  against
     the  Company  and on March 30, 2007, the United  States
     District  Court  for the Southern District  of  Florida
     granted  the  Company's  motion  to  dismiss   in   its
     entirety.

     The  Company  was  a  defendant  in  a  multi-defendant
     lawsuit,  filed  in  August 2006 in the  United  States
     District  Court  For  The Eastern  District  of  Texas,
     Marshall  Division,  seeking  injunctive  and  monetary
     relief  styled  Ronald  A. Katz  Technology  Licensing,
     L.P.,  v. Aetna Inc. et al., Cause No. 206CV 335.   The
     lawsuit  alleged  that the Company  was  infringing  on
     certain  telephone call manipulation technology-related
     patents owned by the plaintiff.  Without admitting  any
     liability  or  wrongdoing,  and  with  no  finding   or
     admission as to the merit or lack of merit of any claim
     or  defense asserted in connection with the litigation,
     in  January, 2007, the Company entered into a licensing
     agreement  for a confidential amount, and a Stipulation
     of  Dismissal with Prejudice was filed with the  Court,
     dismissing the lawsuit against the Company.

     Routine Proceedings

     The  Company  is  a  party  to routine  litigation  and
     administrative complaints incidental to  its  business.
     Management does not believe that the resolution of  any
     or  all  of  such routine litigation and administrative
     complaints is likely to have a material adverse  effect
     on  the  Company's financial condition  or  results  of
     operations.   The  Company has settled complaints  that
     had been filed with various states' pharmacy boards  in
     the  past.  There can be no assurances made that  other
     states will not attempt to take similar actions against
     the  Company in the future.  Legal costs related to the
     above matters are expensed as incurred.

     Employment Agreements

     On   March  16,  2001,  the  Company  entered  into  an
     Executive Employment Agreement with its Chief Executive
     Officer  ("CEO")  and President, Menderes  Akdag  ("Mr.
     Akdag").   Under the terms of this three-year agreement
     the  Company paid the CEO an annual salary of  $150,000
     for   the  first  six  months  of  the  agreement,  and
     thereafter his annual salary was increased to $200,000.
     The  Company  also granted the CEO options to  purchase
     750,000  shares of its common stock under the Company's
     1998 Stock Option Plan at an exercise price of $.32 per
     share,  which vested at the rate of 187,500 options  on
     each of March 16, 2001, 2002, 2003 and 2004.

     On  March  16,  2004,  the Company  amended  the  CEO's
     existing    Executive   Employment   Agreement.     The
     amendments  were as follows: the term of the  agreement
     was  for three years, commencing on March 16, 2004; Mr.
     Akdag's  salary  was  increased to  $250,000  per  year
     throughout the term of the agreement, and Mr. Akdag was
     granted  250,000  incentive  stock  options  under  the
     Company's  1998 Stock Option Plan at an exercise  price
     of $10.64 per share, which vested at the rate of 83,333
     options on each of March 16, 2005 and 2006, and  83,334
     options on March 16, 2007.

     On  February  27, 2007, the Company amended  the  CEO's
     existing  Executive  Employment Agreement  and  entered
     into  Amendment  No.  2  to  the  Executive  Employment
     Agreement  ("Agreement") with Mr. Akdag.  The Agreement
     amended  certain provisions of the Executive Employment
     Agreement as follows: the term of the Agreement will be
     for  three  years, commencing on March  16,  2007;  Mr.
     Akdag's  salary will be increased to $450,000 per  year
     throughout  the term of the Agreement,  and  Mr.  Akdag
     shall  be  granted  90,000 shares of restricted  stock.
     The  restricted stock was granted on February 27, 2007,
     in  accordance with the Company's 2006 Employee  Equity
     Compensation Restricted Stock Plan and the restrictions
     shall lapse ratably over a three-year period.






                                  37
<PAGE>


           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10) Commitments and Contingencies (Continued)

     Operating Lease

     The  Company  leases its 50,000 square  foot  executive
     offices  and  warehouse facility under a non-cancelable
     operating lease, through May 31, 2009.  The Company  is
     responsible  for certain maintenance costs,  taxes  and
     insurance under this lease.  The future minimum  annual
     lease payments are as follows:

             Years Ending March 31,

              2008                   $    500,000
              2009                        520,000
              2010                         87,000
                                     ------------

              Total lease payments   $  1,107,000
                                     ============


     Rent  expense  was $481,000, $435,000 and $383,000  for
     the   years  ended  March  31,  2007,  2006  and  2005,
     respectively.

(11) Sales by Category

     The   following  table  provides  a  breakdown  of  the
     percentage  of our total sales by each category  during
     the indicated periods:

                                              Year Ended March 31,
                                            2007      2006      2005
                                           ------    ------    ------
    Non-prescription medications             70%       70%       69%
    Prescription medications                 29%       29%       30%
    Shipping and handling charges and other   1%        1%        1%
                                           ------    ------    ------
    Total                                   100%      100%      100%
                                           ======    ======    ======

 (12)     Quarterly Financial Data (Unaudited)

      Summarized  unaudited  quarterly  financial  data  for
fiscal 2007 and 2006 is as follows:
<TABLE>
<CAPTION>

Quarter Ended:                       June 30, 2006 September 30, 2006 December 31, 2006  March 31, 2007
                                     ------------------------------------------------------------------
<S>                                  <C>             <C>                <C>               <C>
Sales                                $  50,673,353   $   43,812,754     $  31,352,277     $  36,408,023
Gross Profit                         $  20,124,325   $   16,922,641     $  12,788,877     $  14,730,326
Income from operations               $   7,211,684   $    4,800,446     $   3,865,329     $   5,622,566
Net income                           $   4,750,258   $    3,314,971     $   2,754,234     $   3,624,039
Diluted net income per common share  $        0.20   $         0.14     $        0.11     $        0.15

Quarter Ended:                       June 30, 2005 September 30, 2005 December 31, 2005  March 31, 2006
                                     ------------------------------------------------------------------
Sales                                $  43,631,758   $   38,652,674     $  25,890,095     $  29,408,628
Gross Profit                         $  16,858,586   $   14,850,852     $  10,276,380     $  12,352,971
Income from operations               $   5,273,844   $    3,987,598     $   3,891,063     $   4,992,739
Net income                           $   3,541,586   $    2,710,826     $   2,672,092     $   3,139,010
Diluted net income per common share  $        0.15   $         0.11     $        0.11     $        0.13

</TABLE>




                                  38
<PAGE>


REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING


Management of the Company is responsible for the preparation
and  integrity  of  the  Consolidated  Financial  Statements
appearing  in our Annual Report on Form 10-K.  The financial
statements  were  prepared  in  conformity  with   generally
accepted   accounting   principles   appropriate   in    the
circumstances  and,  accordingly,  include  certain  amounts
based  on  our  best  judgments  and  estimates.   Financial
information in the Annual Report on Form 10-K is  consistent
with that in the financial statements.

Management  of  the Company is responsible for  establishing
and  maintaining  adequate internal control  over  financial
reporting, as such term is defined in Rules 13a-15(f)  under
the  Securities Exchange Act of 1934 ("Exchange Act").   The
Company's  internal  control  over  financial  reporting  is
designed  to  provide  reasonable  assurance  regarding  the
reliability  of  financial reporting and the preparation  of
the Consolidated Financial Statements.  Our internal control
over   financial  reporting  is  supported  by  a  team   of
consultants  and appropriate reviews by management,  written
policies  and guidelines, careful selection and training  of
qualified  personnel,  and  a  written  Corporate  Code   of
Business  Conduct and Ethics adopted by our Company's  Board
of  Directors, applicable to all Company Directors  and  all
officers and employees of our Company and subsidiaries.

Because  of its inherent limitations, internal control  over
financial  reporting may not prevent or detect misstatements
and  even when determined to be effective, can only  provide
reasonable  assurance  with respect to  financial  statement
preparation  and  presentation.  Also,  projections  of  any
evaluation of effectiveness to future periods are subject to
the  risk  that  controls may become inadequate  because  of
changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.

The Audit Committee ("Committee") of our Company's Board  of
Directors, comprised solely of Directors who are independent
in  accordance  with the requirements of  The  NASDAQ  Stock
Market  LLC  listing  standards, the Exchange  Act  and  the
Company's  Corporate Governance Guidelines, meets  with  the
independent auditors and management periodically to  discuss
internal control over financial reporting, and auditing  and
financial reporting matters.  The Committee reviews with the
independent  auditors  the scope and results  of  the  audit
effort.   The  Committee  also meets periodically  with  the
independent  auditors without management present  to  ensure
that  the  independent  auditors have  free  access  to  the
Committee.  Our Audit Committee's Report can be found in the
Company's 2007 Proxy Statement.

Management  assessed  the  effectiveness  of  the  Company's
internal  control over financial reporting as of  March  31,
2007.   In  making  this  assessment,  management  used  the
criteria   set   forth  by  the  Committee   of   Sponsoring
Organizations of the Treadway Commission (COSO) in  Internal
Control  -  Integrated Framework.  Based on our  assessment,
management  believes  that the Company maintained  effective
internal  control over financial reporting as of  March  31,
2007.

The  Company's independent auditors, Goldstein Golub Kessler
LLP,  a registered public accounting firm, are appointed  by
the  Audit  Committee of the Company's Board  of  Directors,
subject  to  ratification  by  our  Company's  shareholders.
Goldstein Golub Kessler LLP have audited and reported on the
Consolidated  Financial Statements of PetMed  Express,  Inc.
and    subsidiaries,   management's   assessment   of    the
effectiveness  of  the  Company's  internal   control   over
financial  reporting, and the effectiveness of the Company's
management's assessment of the effectiveness of our internal
control  over  financial  reporting.   The  reports  of  the
independent auditors are contained in our Annual  Report  on
Form 10-K.


/s/ Menderes Akdag
------------------
Menderes Akdag
Chief Executive Officer, President, Director

May 31, 2007

/s/ Bruce S. Rosenbloom
-----------------------
Bruce S. Rosenbloom
Chief Financial Officer

May 31, 2007


                                  39
<PAGE>


     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
          ON INTERNAL CONTROL OVER FINANCIAL REPORTING


The Board of Directors and Stockholders
PetMed Express, Inc.:

We  have  audited management's assessment, included  in  the
accompanying  Management's Report on Internal  Control  over
Financial  Reporting, that PetMed Express,  Inc.  maintained
effective  internal control over financial reporting  as  of
March  31,  2007, based on criteria established in  Internal
Control-Integrated  Framework issued  by  the  Committee  of
Sponsoring Organizations of the Treadway Commission  (COSO).
PetMed   Express,  Inc.'s  management  is  responsible   for
maintaining   effective  internal  control  over   financial
reporting  and  for its assessment of the  effectiveness  of
internal    control    over   financial    reporting.    Our
responsibility  is  to  express an opinion  on  management's
assessment  and  an  opinion on  the  effectiveness  of  the
company's internal control over financial reporting based on
our audit.

  We  conducted  our audit in accordance with the  standards
of  the  Public  Company Accounting Oversight Board  (United
States).  Those standards require that we plan  and  perform
the  audit  to  obtain  reasonable assurance  about  whether
effective  internal  control over  financial  reporting  was
maintained  in  all  material respects. Our  audit  included
obtaining   an   understanding  of  internal  control   over
financial  reporting,  evaluating  management's  assessment,
testing    and   evaluating   the   design   and   operating
effectiveness of internal control, and performing such other
procedures  as we considered necessary in the circumstances.
We  believe that our audit provides a reasonable  basis  for
our opinion.

  A  company's internal control over financial reporting  is
a process designed 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. A  company's
internal  control  over financial reporting  includes  those
policies  and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect  the transactions and dispositions of the assets  of
the   company;   (2)  provide  reasonable   assurance   that
transactions are recorded as necessary to permit preparation
of   financial  statements  in  accordance  with   generally
accepted  accounting  principles,  and  that  receipts   and
expenditures  of  the  company  are  being  made   only   in
accordance  with authorizations of management and  directors
of   the  company;  and  (3)  provide  reasonable  assurance
regarding  prevention  or timely detection  of  unauthorized
acquisition,  use,  or disposition of the  company's  assets
that   could  have  a  material  effect  on  the   financial
statements.

  Because  of  its  inherent limitations,  internal  control
over   financial  reporting  may  not  prevent   or   detect
misstatements.  Also,  projections  of  any  evaluation   of
effectiveness to future periods are subject to the risk that
controls  may  become  inadequate  because  of  changes   in
conditions,  or  that  the degree  of  compliance  with  the
policies or procedures may deteriorate.

  In   our  opinion,  management's  assessment  that  PetMed
Express,  Inc.  maintained effective internal  control  over
financial  reporting as of March 31, 2007 is fairly  stated,
in  all  material  respects, based on  criteria  established
in  Internal  Control-Integrated  Framework  issued  by  the
Committee  of  Sponsoring  Organizations  of  the   Treadway
Commission (COSO). Also in our opinion, PetMed Express, Inc.
maintained,  in  all  material respects, effective  internal
control over financial reporting as of March 31, 2007, based
on   criteria  established  in  Internal  Control-Integrated
Framework    issued   by   the   Committee   of   Sponsoring
Organizations of the Treadway Commission (COSO).

  We  have also audited, in accordance with the standards of
the   Public  Company  Accounting  Oversight  Board  (United
States),   the   March   31,  2007  consolidated   financial
statements of PetMed Express, Inc. and our report dated  May
31, 2007 expressed an unqualified opinion on those financial
statements.



/s/ Goldstein Golub Kessler LLP
-------------------------------
Goldstein Golub Kessler LLP

New York, New York
May 31, 2007






                                  40
<PAGE>


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE

  Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure 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-14(c) promulgated under the Securities Exchange Act
of  1934,  as amended) as of the year ended March 31,  2007,
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
for   timely   gathering,  analyzing,  and  disclosing   the
information we are required to disclose in our reports filed
under the Securities Exchange Act of 1934, as amended.

Management's  Report  on  Internal  Control  over  Financial
Reporting

  Our   management  is  responsible  for  establishing   and
maintaining   adequate  internal  control   over   financial
reporting, as such term is defined in Exchange Act Rules 13a-
15(f).  Under the supervision and with the participation  of
our  management, including our Chief Executive  Officer  and
Chief  Financial Officer, we conducted an evaluation of  the
effectiveness   of  our  internal  control  over   financial
reporting  based  on  the framework in  Internal  Control  -
Integrated  Framework issued by the Committee of  Sponsoring
Organizations  of  the  Treadway Commission.  Based  on  our
evaluation  under  the  framework  in  Internal  Control   -
Integrated  Framework,  our management  concluded  that  the
Company maintained effective internal control over financial
reporting  as of March 31, 2007. Our management's assessment
of  the effectiveness of our internal control over financial
reporting as of March 31, 2007 has been audited by Goldstein
Golub   Kessler   LLP,  an  independent  registered   public
accounting firm, as stated in their report which is included
herein.

Changes in Internal Controls over Financial Reporting

  There  have  been  no  significant  changes  made  in  our
internal  controls  over financial  reporting  or  in  other
factors   that  could  significantly  affect  our   internal
controls  over  financial reporting during our  last  fiscal
quarter   identified  in  connection  with  the   evaluation
referred to above.

ITEM 9B. OTHER INFORMATION

  Not applicable.









                                  41
<PAGE>


                            PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

  The information required by this item will be set forth in
our  Proxy Statement relating to our 2007 Annual Meeting  of
Stockholders  to  be  held  on  August  3,  2007,   and   is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

  The information required by this item will be set forth in
our  Proxy Statement relating to our 2007 Annual Meeting  of
Stockholders  to  be  held  on  August  3,  2007,   and   is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT AND RELATED STOCKHOLDER MATTERS

    The  information  required  by  this  item  (other  than
information required by Item 201(d) of Regulation  S-K  with
respect  to  equity compensation plans, which is  set  forth
under  Item 5. in this Annual Report on Form 10-K)  will  be
set forth in our Proxy Statement relating to our 2007 Annual
Meeting of Stockholders to be held on August 3, 2007, and is
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
         DIRECTOR INDEPENDENCE

  The information required by this item will be set forth in
our  Proxy Statement relating to our 2007 Annual Meeting  of
Stockholders  to  be  held  on  August  3,  2007,   and   is
incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

  The information required by this item will be set forth in
our  Proxy Statement relating to our 2007 Annual Meeting  of
Stockholders  to  be  held  on  August  3,  2007,   and   is
incorporated herein by reference.




                                  42
<PAGE>


                             PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report on Form 10-K.

  (1)  Consolidated Financial Statements

  The following exhibits are filed as part of this report on Form 10-K.

  (3)  Articles of Incorporation and By-Laws

  3.1  Amended and Restated Articles of Incorporation (1)

  3.2  By-Laws of the Corporation (1)

  (4)  Instruments Defining the Rights of Security Holders

  4.1  Form of Warrant issued to Noble International Investments, Inc. (1)

  4.2  Specimen common stock certificate (1)

 (10)  Material Contracts

 10.1  1998 Stock Option Plan (1)

 10.2  Employment Agreement with Menderes Akdag (incorporated by
       reference to Exhibit 10 of the Registrant's Form 8-K on March 16,
       2001, Commission File No. 000-28827).

 10.3  Agreement for the Sale and Leaseback of the Land  and
       Building (incorporated by reference to Exhibit 99.1 of the
       Registrant's Form 8-K on June 14, 2001, Commission File No. 000-
       28827).

 10.4  Amendment Number 1 to Executive Employment Agreement with
       Menderes Akdag (incorporated by reference to Exhibit 99.1 of the
       Registrant's Form 8-K on March 16, 2004, Commission File No. 000-
       28827).

 10.5  Termination of Marc Puleo's Executive Employment Agreement
       (incorporated by reference to Exhibit 10.13 of the Registrant's
       Form 8-K on August 1, 2005, Commission File No. 000-28827).

 10.6  Amendment Number 2 to Executive Employment Agreement with
       Menderes Akdag (incorporated by reference to Exhibit 99.1 of the
       Registrant's Form 8-K on March 16, 2007, Commission File No. 000-
       28827).

 10.7  2006 Employee Equity Compensation Restricted Stock Plan
       (incorporated by reference in our definitive Proxy Statement for
       our 2006 Annual Meeting of Stockholders held on July 28, 2006).

 10.8  2006 Outside Director Equity Compensation Restricted Stock
       Plan (incorporated by reference in our definitive Proxy Statement
       for our 2006 Annual Meeting of Stockholders held on July 28,
       2006).

 (14)  Corporate Code of Ethics

 14.1  Corporate  Code of Ethics (incorporated by  reference in our
       definitive Proxy Statement for our 2004 Annual Meeting of
       Stockholders held on August 6, 2004).

 (21)  Subsidiaries of Registrant

 21.1  Subsidiaries of Registrant (filed herewith).




                                  43
<PAGE>


 (31)  Certifications

 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-K for the year
       ended March 31, 2007, 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-K for the year
       ended March 31, 2007, Commission File No. 000-28827).

 (32)  Certifications

 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-K for the year ended  March 31, 2007, Commission
       File No. 000-28827).

 (1)   Incorporated by reference to the Registration Statement on
       Form 10-SB, File No. 000-28827, as amended, as filed with the
       Securities and Exchange Commission.















                                  44
<PAGE>


                           SIGNATURES

   In  accordance with Section 13 or 15(d) of  the  Exchange
Act,  the registrant caused this report to be signed on  its
behalf by the undersigned, thereunto duly authorized.

Dated: June 1, 2007

                               PETMED EXPRESS, INC.
                               (the "Registrant")

                               By:  /s/ Menderes Akdag
                               --------------------------
                               Menderes Akdag
                               Chief Executive Officer and President
                               (principal executive officer)

  In  accordance with the Exchange Act, this report has been
signed  below  by  the following persons on  behalf  of  the
registrant and in the capacities and on June 1, 2007.

  SIGNATURE                      TITLE

/s/ Menderes Akdag            Chief Executive Officer and President
--------------------------    (principal executive officer)
Menderes Akdag                Officer and Director

/s/ Robert C. Schweitzer      Chairman of the Board
--------------------------
Robert C. Schweitzer          Director

/s/ Bruce S. Rosenbloom       Chief Financial Officer and Treasurer
--------------------------    (principal financial and accounting officer)
Bruce S. Rosenbloom           Officer

/s/ Ronald J. Korn            Director
--------------------------
Ronald J. Korn

/s/ Gian M. Fulgoni           Director
--------------------------
Gian M. Fulgoni

/s/ Frank J. Formica          Director
--------------------------
Frank J. Formica





                                  45
<PAGE>