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

                          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, 2005

                                 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 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
 --------------------         -----------------------------------------
    NONE

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

                COMMON STOCK, $.001 PAR VALUE
              _____________________________________

  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.  [ ]

  Indicate  by  check  mark whether  the  registrant  is  an
accelerated  filer (as defined in Rule 12b-2  of  the  Act).
Yes [ ] No [X]

  The  aggregate  market value of the voting and  non-voting
common  equity held by non-affiliates computed by  reference
to  the  price at which the common equity was last sold,  or
the average bid and asked price of such common equity, as of
the  last  business  day of the registrant's  most  recently
completed   second  fiscal  quarter,  was  $61,167,000   (at
September 30, 2004).

  The  number  of  shares of the Registrant's  common  stock
outstanding as of June 3, 2005 was 23,487,058.

               DOCUMENTS INCORPORATED BY REFERENCE

  Information  to  be  set  forth  in  our  Proxy  Statement
relating  to our 2005 Annual Meeting of Stockholders  to  be
held  on  August   5, 2005 is incorporated by  reference  in
Items 10, 11, 12, 13, and 14 of Part III of this report.

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<PAGE>


                      PETMED EXPRESS, INC.

                 2005 Annual Report on Form 10-K

                        TABLE OF CONTENTS

                                                                        Page
PART I.....................................................................1
 Item 1.   Business........................................................1
 Item 2.   Properties.....................................................10
 Item 3.   Legal Proceedings..............................................10
 Item 4.   Submission of Matters to a Vote of Security Holders............11
PART II...................................................................12
 Item 5.   Market for Registrant's Common Equity, Related Stockholder
              Matters and Issuer Purchases of Equity Securities...........12
 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......................40
 Item 9A.  Controls and Procedures........................................40
 Item 9B.  Other Information..............................................40
PART III..................................................................41
 Item 10.  Directors and Executive Officers of the Registrant.............41
 Item 11.  Executive Compensation.........................................41
 Item 12.  Security Ownership of Certain Beneficial Owners
              and Management and Related Stockholder Matters..............41
 Item 13.  Certain Relationships and Related Transactions.................41
 Item 14.  Principal Accounting Fees and Services.........................41
PART IV...................................................................42
 Item 15.  Exhibits, Financial Statement Schedules........................42
SIGNATURES................................................................44


<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[R],  Advantage[R],
Heartgard[R],   Sentinel[R],   Interceptor[R],   Program[R],
Revolution[R],  and Rimadyl[R].  Generally, our  prices  are
discounted  from  the  prices  for  medications  charged  by
veterinarians.

  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,
                                          2005    2004    2003
                                         ------  ------  ------
<S>                                      <C>     <C>     <C>

Non-prescription medications               69%     69%     64%
Prescription medications                   30%     30%     29%
Shipping and handling charges and other     1%      1%      7%
                                         ------  ------  ------
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, supported by 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 5.6 million visitors to our website  over  the
past 12 months (June 2004 to May 2005), approximately 14% of
those  visitors  placed an order, and our website  generated
approximately  53%  of our total sales  for  the  same  time
period.

Telephone Contact Center

  We  currently  employ 92 customer care representatives  in
our  contact  center.   Our  customer  care  representatives
receive  and process inbound customer calls, facilitate  our
outbound campaigns around maximizing customers' reorders  on
a consistent basis, 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  quality
customer  care  and service and support.  Our customer  care
representatives receive a base salary and are rewarded  with
commissions for sales.

Direct Mail/Print

  The  1-800-PetMeds  catalog is a full-color  catalog  that
features  approximately  400 of 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.

  In  March  2004 the Company introduced a free  service  on
its  website,  called, "ASK THE VET"  which  is  located  at
www.1800petmeds.com.  Pet owners or anyone else  can  ask  a
--------------------
question  and  a veterinarian or pharmacist will  personally
answer  it  via  email, most within 48 hours.  Additionally,
all  questions  and answers are conveniently  available  for
viewing on the website, which lists over 30 categories on  a
wide   range   of  pet-related  issues.   Subjects   include
allergies,  fleas and ticks, heartworms and bone  and  joint
care.

Our Customers

  Approximately 1,400,000 customers have purchased  from  us
within  the  last  two  years.  We  attracted  approximately
510,000  and 572,000 new customers in fiscal 2005 and  2004,
respectively.   Our  customers are  located  throughout  the
United  States, with approximately 51% of customers residing
in  California, Florida, Texas, New York, Pennsylvania,  New
Jersey,  and  Georgia.   The  average  retail  purchase  was
approximately $76.

  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 brick and mortar  stores  in  the
United  States.  For the fiscal year ended March  31,  2005,
the majority of our sales were made to retail customers with
approximately 2% of our sales made to wholesale customers.


                                  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 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,  with  the  tagline  "the   1-800-PetMeds
difference,  great  savings, fast service,  free  shipping."
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.

Direct Mail/Print and E-mail

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

Online Marketing

  We  supplement  our  traditional advertising  with  online
advertising  and marketing efforts.  We are 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.  We also 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.

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.   (See Risk  Factors.)   Having  strong
relationships  with product manufacturers  will  ensure  the
availability of 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.  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

  The   Company   provides  its  customers  with   toll-free
telephone access to its 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,    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 customer's
order  is  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  43,000  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, and 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 PetMed Express 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 the 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  1.4%  of  total
sales.

Technology

  PetMed  Express utilizes 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  customers.   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.  The
Company  believes  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 the 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  PetMed
Express.

  According  to  the  American  Pet  Products  Manufacturers
Association,  pet  spending in the United  States  increased
5.9% to $34.4 billion in 2004.  Pet supplies and medications
represented  $8.1 billion, or 24% of the total pet  spending
in  the  United States.  The pet medication market  size  is
estimated to be approximately $3 billion, with veterinarians
having  the majority of the market share.  The dog  and  cat
population  is approximately 153 million, with approximately
62% of all households owning a pet.


                                  4
<PAGE>


  The  Company  believes  that the following  are  the  main
competitive strengths which differentiate 1-800-PetMeds from
the competition:

   -    "1-800-PetMeds" brand name;
   -    Quality customer service, care and support;
   -    Experienced management team;
   -    Consumer benefit structure of savings and convenience;
   -    Licensed pharmacy to conduct business in 49 states;
   -    Operating / technology infrastructure in place; and
   -    Multiple sources of supply for 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]" and "1-800-PetMeds[R]" and have a trademark
application pending for "PetMeds."

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  license is valid until February 28, 2007.  We are  also
licensed and/or regulated by 48 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 ("EPA").  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 with the Florida Board
of  Pharmacy  as  a community 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.  See
Item 3. Legal Proceedings.

Employees

  The Company currently has 140 full time employees, and  40
temporary employees, including: 101 in sales, customer  care
and  marketing; 23 in fulfillment and purchasing; 45 in  our
pharmacy;  3  in information technology; 3 in administrative
positions;  and  5  in management.  None  of  the  Company's
employees  are represented by a labor union, or governed  by
any  collective bargaining agreements.  The Company reserves
the right to hire the temporary employees after a period  of
3   months.   The  Company  considers  relations  with   its
employees as satisfactory.

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 $8,010,000,  $5,814,000,  and
$3,258,000  for  the years ended March 31, 2005,  2004,  and
2003,  respectively.  Our profitability during  fiscal  2005
was due in part to increases in our reorder revenues and the
leveraging of our general and administrative and advertising
expenses.   There  are  no assurances we  will  continue  to
generate revenues at this increased level, or that  we  will
remain  profitable during fiscal 2006 and  beyond.   If  our
operations were to cease being profitable, our liquidity  in
future periods would be adversely affected.

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.


                                  5
<PAGE>


  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 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 with the Florida Board of  Pharmacy
as  a  community  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.

Our  alternate veterinarian program was discontinued and was
under  investigation by the Florida Board  of  Pharmacy  and
Florida  Agency  for  Health  Care  Administration,  and  by
various  other state pharmacy boards, which could reduce  or
eliminate   our  ability  to  verify  certain  prescriptions
outside the State of Florida.

  We  utilized  the  services of alternate veterinarians  to
verify  certain  prescriptions for animals residing  outside
the  State of Florida.  The alternate veterinarian  was  not
the  veterinarian who had actually seen the animal  and  may
have  resided  in  a different state than  the  animal.   In
February  2002,  we  voluntarily  ceased  the  use  of   the
alternate  veterinarian  program,  and  in  March  2002,   a
business  decision  was  made to  enter  into  a  settlement
agreement with the Florida Board of Pharmacy.  See  Item  3.
Legal  Proceedings.   Many  of  the  complaints  related  to
prescriptions  verified  through our alternate  veterinarian
program.    The  alternate  veterinarian  program   used   a
veterinarian outside the State of Florida to verify  certain
prescriptions  for pets outside the State of  Florida.   The
program  was  not  used for pets residing in  the  State  of
Florida.   Future  complaints may  be  brought  against  the
Company  by  states in which this program was utilized.   We
are unable to assess the potential impact on our business or
any  future  penalties that may be assessed  from  these  or
other complaints.

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, 2005 and 2004,  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 650 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
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.   Sales  of   prescription
medications represented approximately 30% 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, our sales
could  decrease and our financial condition and  results  of
operations may be materially adversely affected.

Our  success depends in part on the willingness of consumers
to purchase pet medications from us. If we do not succeed in
changing   consumer-purchasing   patterns,   our   financial
condition  and  results  of  operations  may  be  materially
adversely affected.

  The  direct marketing of prescription and non-prescription
pet  medications and health and nutritional  supplements  is
relatively new.  Our success will depend upon our ability to
engage   consumers  who  have  historically  purchased   pet
medications  and  health  and nutritional  supplements  from
veterinarians.  We may not be able to convert a large number
of  these pet owners to our customers. In order for us to be
successful,  many  of these consumers  must  be  willing  to
utilize  new  ways  of  buying these  products.   We  cannot
guarantee  that  we  will be successful  in  shifting  these
consumer purchasing patterns away from veterinarians to  us.
If  we  do  not attract consumers to purchase these products
from  us,  our financial condition and results of operations
may be materially adversely affected.

In the past we have purchased medications from international
distributors   and  we  did  not  always   know   if   those
distributors had the authority of the manufacturer  to  sell
the  products in the United States.  As a result, we may  be
subject  to future civil or administrative actions regarding
those products.

  During  fiscal  2002,  a business  decision  was  made  to
discontinue   purchasing  any  product  from   international
distributors.    We   had  purchased  a   portion   of   our
prescription    and   non-prescription   medications    from
international  distributors in the past.  These  medications
may   have  been  trademarked  and/or  copyrighted  products
manufactured  in foreign countries or in the  United  States
and  sold by the manufacturer to foreign distributors.  Some
of  the  prescription and non-prescription  medications  may
have  been  manufactured by entities,  particularly  foreign
licensees,  who  are  not the licensors  or  owners  of  the
trademarks or copyrights for the medications.  From time  to
time,  United States trademark and copyright holders,  their
licensees, trade associations and the United States  Customs
Service  have  brought  forth litigation  or  administrative
agency proceedings in an attempt to halt the importation  or
sale of trademarked and/or copyrighted products.  The courts
remain  divided on the extent to which trademark,  copyright
or  other laws, rules, regulations or decisions may restrict
the  importation  or sales of this merchandise  without  the
consent  of the trademark or copyright owner.  See  Item  3.
Legal Proceedings.

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 51% of our sales for the fiscal  year
ended  March 31, 2005 were made to customers located in  the
states   of   California,   Florida,   Texas,   New    York,
Pennsylvania,  New Jersey, and Georgia.  If for  any  reason
our  license to operate a pharmacy in one or more  of  those
states  should  be suspended or revoked, or  if  it  is  not
renewed,  our 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
profitably compete 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   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
increased operating losses.

  We  also face a significant challenge from our competitors
forming  alliances with each other, such  as  those  between
online  and  brick and mortar retailers. These relationships
may  enable both their retail and online stores to negotiate
better


                                  7
<PAGE>



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

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

  We  rely  on  a  combination of trademark,  trade  secret,
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,  our
content and our trademarks.

  Litigation or proceedings before the United States  Patent
and  Trademark  Office 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.

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

  Our    Internet    domain    names,   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   domain names, our
competitors could capitalize on our brand recognition.  We are
aware of substantially   similar  domain    names,   including
www.petmed.com,  used  by  competitors.  Governmental agencies
--------------
and their designees generally regulate   the  acquisition  and
maintenance of domain names.  The regulation of domain   names
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
domain  names   and   laws protecting  trademarks  and similar
proprietary  rights is unclear.  Therefore, we may not be able
to  protect  our  own domain names, or prevent  third  parties
from acquiring domain names  that  are  confusingly similar to,
infringe  upon  or otherwise decrease the value of our  domain
names.

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.


                                  8
<PAGE>



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, 2004, September 30, 2004,  December
31,  2004,  and March 31, 2005 Company sales were 33%,  26%,
19%, and 22%, respectively.

  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;
   -    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.

The  interest of our controlling stockholder could  conflict
with those of our other stockholders.

  Tricon    Holdings,   LLC,   ("Tricon")   our    principal
stockholder,   owns  and  controls  23.3%  of   our   voting
securities.   This  stockholder is  able  to  influence  the
outcome  of  stockholder votes, including votes  concerning:
the election of directors; amendments to our charter and by-
laws; and the approval of significant corporate transactions
such  as  a  merger or sale of our assets.  This controlling
influence could have the effect of delaying or preventing  a
change  in control, even if many of our stockholders believe
it is in their best interest.

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


                                  9
<PAGE>


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 2.  PROPERTIES

  Our   facilities,   including  our   principal   executive
offices,  are  located  at 1441 S.W.  29th  Avenue,  Pompano
Beach, Florida 33069.  On May 31, 2001, the Company sold its
50,000  square  foot  office  building,  which  houses   the
Company's principal executive offices and warehouse,  to  an
unrelated third party.  The Company received gross  proceeds
of $2,150,000, of which approximately $1,561,000 was used to
pay  off the mortgage, and the Company recognized a loss  on
the  sale  of  approximately  $185,000.   The  Company  then
entered into a five-year term lease agreement for 20,000  of
the  50,000  square foot Pompano Beach office building.   On
February 22, 2002, the Company entered into a lease addendum
which added approximately 12,000 square feet, effective June
1,  2002,  to accommodate the Company's warehouse expansion.
On  July  25,  2003 the Company signed an amendment  to  its
current lease agreement to obtain an additional 8,000 square
feet,  with an option to add another 3,600 square  feet,  to
its  current  32,000  square  foot  facility,  which  became
available  on  October  1,  2003.   This  addition  to   the
warehouse  was necessary to increase the Company's  capacity
to  store  additional inventory during our peak season.   On
May  18, 2005 the Company signed an amendment to its current
lease  agreement to extend the lease for 3 additional  years
and exercised the option for another 3,600 square feet.  The
future   minimum  annual  lease  payments  are  as  follows:
$429,000 for fiscal 2006, $452,000 for fiscal 2007, $470,000
for  fiscal 2008, $489,000 for fiscal 2009, and $82,000  for
fiscal 2010.

ITEM 3.  LEGAL PROCEEDINGS

  Various  complaints had been filed with the Florida  Board
of  Pharmacy  between November 2000 and March  2002.   These
complaints,   the   majority  of   which   were   filed   by
veterinarians  who are in competition with the  Company  for
the  sale  of  pet  prescription-required products,  alleged
violations  of  the  Florida Pharmacy  Act  and  regulations
promulgated thereunder.  The vast majority of the complaints
alleged   that   the   Company,  through  its   pharmacists,
improperly    dispensed   prescription-required   veterinary
medication  based  on  prescriptions  verified  through  the
Company's discontinued alternate veterinarian program.   The
alternate  veterinarian program used a veterinarian  outside
the  State  of  Florida to verify certain prescriptions  for
pets  outside the State of Florida.  While the  program  was
not  used  for  pets residing in the State of  Florida,  the
complaints  had,  for  the most part, been  filed  with  the
Florida  Board  of Pharmacy.  Other complaints  alleged  the
dispensing  of medication without a valid prescription,  the
sale  of  non-conforming  products and  that  the  Company's
pharmacy  was  operating  at the same  location  as  another
pharmacy, with which it had a contractual relationship.  The
Company  contested all allegations and continued discussions
in an attempt to reach a resolution of these matters.

  In  February 2002, the Company voluntarily ceased the  use
of  its alternate veterinarian program, and in March 2002  a
business  decision  was  made to  enter  into  a  settlement
agreement with the Florida Board of Pharmacy, rather than to
proceed with costly and lengthy litigation.  In April  2002,
the  Florida  Board  of  Pharmacy  approved  the  settlement
agreement.  The Florida Board of Pharmacy did not reach  any
finding  of  fact  or  conclusion of law  that  the  Company
committed  any  wrongdoing or violated  any  rules  or  laws
governing  the  practice  of  pharmacy.   According  to  the
settlement  agreement, the Company's  pharmacy  license  was
placed  on  probation for a period of three  years  and  the
Company,  the Company's pharmacists and contracted  pharmacy
and  pharmacist, paid approximately $120,000  in  fines  and
investigative costs in July 2002.  Based on its demonstrated
compliance with pharmacy rules and laws, effective March 11,
2004,  PetMed Express was released from probation  over  one
year  early  by the Florida Board of Pharmacy.  The  Company
remains  licensed in the State of Florida  and  continue  to
operate its principal business in Florida.

  The  Company  has settled other complaints that  had  been
filed  with  various other states' pharmacy  boards  in  the
past.   There  can be no assurances made that  other  states
will  not  attempt to take similar actions or other  actions
including denying pharmacy licensure, against the Company in
the future.

  The  Company is a defendant in a lawsuit, filed in  August
2002,  in Texas state district court seeking injunctive  and
monetary  relief  styled Texas State Board of  Pharmacy  and
State  Board  of  Veterinary  Medical  Examiners  v.  PetMed
Express,  Inc.  Cause No.GN-202514, in  the  201st  Judicial
District  Court, Travis County, Texas.  The Company  in  its
initial  pleading denied the allegations contained  therein.
The  Company  will  vigorously defend, is confident  of  its
compliance  with the applicable law, and finds wrong-on-the-
facts the vast majority of the allegations contained in  the
Plaintiffs'   supporting  documentation  attached   to   the
lawsuit.   Discovery commenced shortly after the  filing  of
the  lawsuit,  and  at this stage of the  litigation  it  is
difficult  to  assess any possible outcome or  estimate  any
potential loss in the event of an adverse outcome.


                                  10
<PAGE>


  From   August  17,  2004  until  October  12,   2004   six
shareholder class action lawsuits were filed in  the  United
States  District Court for the Southern District of  Florida
against  PetMed Express, Inc. and certain of  the  Company's
officers and directors for alleged violations of the federal
securities laws.  These complaints alleged violations of the
anti-fraud  provision  contained in  Section  10(b)  of  the
Securities  Exchange Act of 1934 and Rule 10b-5,  thereunder
and asserted violations of Section 20(a) of that act against
the  individual  defendants  as  controlling  persons.   The
actions  purported to be brought on behalf of purchasers  of
the  Company's  common  stock  between  June  18,  2003  and
July 26, 2004, and the complaints generally alleged that the
defendants  made  false or misleading statements  concerning
the Company's business, prospects, and operations and failed
to  disclose,  among  other things, (1) that  the  Company's
business  allegedly depends on veterinarians,  who  are  the
Company's competitors, to authorize prescriptions, (2)  that
the  Company's  business  model, which,  in  part,  requires
veterinarians    to    authorize    prescriptions,    caused
veterinarians to incur certain costs and burdens, which were
supposedly  shifted  from the Company to the  veterinarians,
(3)  the  existence of a supposed increase  in  veterinarian
refusals  to  comply with Company requests for  prescription
authorization,  (4)  the  Company's  alleged  inability   to
guarantee  the  quality of, and maintain control  over,  pet
medications  and  the negative impact  this  was  having  on
veterinarian willingness to authorize prescriptions, and (5)
that the foregoing allegations were adversely impacting  the
Company.   The  complaints also alleged that the  individual
defendants   were  motivated  to  engage  in   the   alleged
violations  so that they could affect sales of their  shares
of  the  Company's  common  stock at  artificially  inflated
prices.  The plaintiffs sought unspecified monetary damages.
On  February  1,  2005,  the  six shareholder  class  action
lawsuits  against PetMed Express, Inc. and  certain  of  the
Company's  officers and directors were voluntarily dismissed
by the plaintiffs without prejudice.

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
are  likely  to  have  a  material  adverse  effect  on  the
Company's financial condition or results of operations.

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,
2005.


                                  11
<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
National  Market  ("NASDAQ") under the symbol  "PETS."   The
prices  set  forth below reflect the range of high  and  low
closing  prices per share in each of the quarters of  fiscal
2005  and  2004 as reported by the NASDAQ and the  over-the-
counter bulletin board:

<TABLE>
<CAPTION>
   <S>                    <C>      <C>

   Fiscal 2005:           High      Low
   First Quarter          $12.29    $6.73
   Second Quarter         $8.10     $4.10
   Third Quarter          $7.61     $4.63
   Fourth Quarter         $8.55     $6.50

   Fiscal 2004:           High      Low
   First Quarter          $5.00     $2.27
   Second Quarter         $8.15     $5.24
   Third Quarter          $9.23     $7.00
   Fourth Quarter         $12.96    $7.05

</TABLE>


There  were 83 holders of record of our common stock at  May
31,  2005,  and  we estimate there were approximately  8,600
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,  if
any,  to  finance the expansion of our business and  do  not
anticipate that any cash dividends on our common stock  will
be  paid  in  the  foreseeable future.  The future  dividend
policy  will  depend on our earnings, capital  requirements,
expansion  plans,  financial condition  and  other  relevant
factors.


                                  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.  The consolidated statements  of  operations
data  set  forth below for the fiscal years ended March  31,
2005, 2004, and 2003 and the consolidated balance sheet data
as  of  March 31, 2005 and 2004 have been derived  from  our
audited consolidated financial statements which are included
elsewhere in this Form 10-K.  The consolidated statements of
operations  data set forth below for the fiscal years  ended
March  31, 2002 and 2001 and the consolidated balance  sheet
data  as  of March 31, 2003, 2002 and 2001 have been derived
from our audited consolidated financial statements which are
not included in this Form 10-K.

<TABLE>
<CAPTION>
                               STATEMENTS OF OPERATIONS

                                                           Fiscal Year Ended March 31,
                             _______________________________________________________________________________________
                                 2005              2004              2003              2002              2001
                             _______________________________________________________________________________________
<S>                          <C>               <C>               <C>               <C>               <C>


Sales                        $   108,357,747   $    93,994,233   $    54,974,916   $    32,025,931   $    10,006,285
Cost of sales                     64,700,002        55,824,406        31,517,639        18,894,493         6,367,604
Gross profit                      43,657,745        38,169,827        23,457,277        13,131,438         3,638,681
Operating expenses                31,156,119        28,958,433        19,974,270        12,383,498         6,277,779
Net income (loss)                  8,010,370         5,813,604         3,257,565           825,413        (2,826,707)
Net income (loss) per common share:
    Basic                               0.35              0.30              0.19              0.05             (0.28)
    Diluted                             0.34              0.25              0.16              0.04             (0.28)
Weighted average number of
  common shares outstanding:
    Basic                         22,862,417        19,471,681        17,300,130        16,360,010         9,943,625
    Diluted                       23,833,189        23,689,866        20,749,515        19,739,493         9,943,625

                                     BALANCE SHEET DATA

                                                                   March 31,
                             _______________________________________________________________________________________
                                 2005              2004              2003              2002              2001
                             _______________________________________________________________________________________

Working capital (deficit)    $    21,968,784   $    11,338,004   $     3,017,641   $       690,588   $    (2,473,349)
Total assets                      28,119,483        18,480,808         9,025,796         4,654,236         4,504,757
Total liabilities                  3,902,419         4,486,299         3,433,108         3,071,536         3,747,470
Shareholders' equity              24,217,064        13,994,509         5,592,688         1,582,700           757,287

                              NON FINANCIAL DATA (UNAUDITED)

                                                                   March 31,
                             _______________________________________________________________________________________
                                 2005              2004              2003              2002              2001
                             _______________________________________________________________________________________

New customers acquired               510,000           572,000           414,000           275,000            60,000
Total accumulated customers        1,831,000         1,321,000           749,000           335,000            60,000


</TABLE>



                                  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 under the symbol "PETS."  Prior to the  move  to
the NASDAQ, the Company's shares had been traded on the over-
the-counter  bulletin board.  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.

  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 53%  of  all
sales  are generated via the Internet compared to  50%  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 one to three banking  days  for
sales  paid  by credit cards, which minimizes  the  accounts
receivable   balances  relative  to  the  Company's   sales.
Certain wholesale customers are extended credit terms, which
usually  require  payment within 30 days of  delivery.   The
Company's sales returns average was approximately 1.4  %  of
sales  for  both the fiscal years ended March 31,  2005  and
2004.   The  twelve month average purchase was approximately
$76  and $73 per order for the fiscal years ended March  31,
2005 and 2004, respectively.

Critical Accounting Policies

  Our  discussion  and  analysis of our financial  condition
and  the  results  of  our operations  are  based  upon  our
condensed  consolidated financial statements  and  the  data
used  to prepare them.  The Company's condensed consolidated
financial  statements have been prepared in accordance  with
accounting  principles  generally  accepted  in  the  United
States  of America.  On an ongoing basis we re-evaluate  our
judgments  and estimates including those related to  product
returns,  bad debts, inventories, 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  consumer.
Outbound  shipping and handling fees are included  in  sales
and   are  billed  upon  shipment.   Shipping  and  handling
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  one  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, 2005  and  2004  the
allowance  for  doubtful accounts was approximately  $37,000
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 $228,000 for both the fiscal years  ended
March 31, 2005 and 2004.


                                  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 ten 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
condensed 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  items
appearing  in  the  Company's  Consolidated  Statements   of
Income:

<TABLE>
<CAPTION>

                                            Fiscal Year Ended March 31,

                                             2005       2004      2003
                                           -------    -------   -------
<S>                                        <C>        <C>       <C>

 Sales                                      100.0 %    100.0 %   100.0 %
 Cost of sales                               59.7       59.4      57.3
                                           -------    -------   -------
 Gross profit                                40.3       40.6      42.7
                                           -------    -------   -------
 Operating expenses:
      General and administrative             10.6       11.4      14.5
      Advertising                            17.7       18.8      21.2
      Depreciation and amortization           0.5        0.6       0.7
                                           -------    -------   -------
 Total operating expenses                    28.8       30.8      36.4
                                           -------    -------   -------

 Income from operations                      11.5        9.8       6.3
                                           -------    -------   -------
 Total other income (expense)                 0.1          -         -
                                           -------    -------   -------

 Income before provision for income taxes    11.6        9.8       6.3

 Provision for income taxes                   4.2        3.6       0.4
                                           -------    -------   -------
 Net income                                   7.4 %      6.2 %     5.9 %
                                           =======    =======   =======

</TABLE>


                                  15
<PAGE>




Fiscal 2005 Compared to Fiscal 2004

Sales
-----

  Sales increased $14,364,000, or 15.3%, to $108,358,000 for
the year ended March 31, 2005, from $93,994,000 for the year
ended  March  31,  2004.   The  increase  in  sales  can  be
primarily  attributed  to  increased  retail  reorders   and
wholesale  sales, partially offset by decreased  retail  new
order 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  $17,285,000, or 33.6%,  to  approximately
$68,719,000 for the fiscal year ended March 31,  2005,  from
approximately  $51,434,000 for the fiscal year  ended  March
31,  2004.   Retail  new  order  sales  have  decreased   by
approximately   $4,908,000,  or  11.7%,   to   approximately
$37,208,000 for the fiscal year ended March 31,  2005,  from
approximately  $42,116,000 for the fiscal year  ended  March
31,  2004.   Wholesale sales have increased by approximately
$1,987,000,  or  447%, to approximately $2,431,000  for  the
fiscal   year  ended  March  31,  2005,  from  approximately
$444,000  for  the fiscal year ended March  31,  2004.   The
Company acquired approximately 510,000 new customers for the
year ended March 31, 2005, compared to 572,000 new customers
for  the  same period in the prior year.  The slow  down  in
retail sales growth for fiscal 2005 compared to fiscal  2004
can  be  attributed to decreased advertising efficiency  and
increased   competition   both   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 2005,  the
Company's sales were approximately 33%, 26%, 19%,  and  22%,
respectively.

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

   Cost  of  sales  increased by $8,876,000,  or  15.9%,  to
$64,700,000 for the fiscal year ended March 31,  2005,  from
$55,824,000 for the fiscal year ended March 31,  2004.   The
increase  in  cost  of  sales is  directly  related  to  the
increase  in  retail and wholesale sales in fiscal  2005  as
compared to fiscal 2004.  As a percent of sales, the cost of
sales  was  59.7% in fiscal 2005, as compared  to  59.4%  in
fiscal  2004.  The percentage increase can be attributed  to
increases  in  wholesale sales which had a  higher  cost  of
sales percentage.

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

   Gross  profit  increased  by  $5,488,000,  or  14.4%,  to
$43,658,000 for the fiscal year ended March 31,  2005,  from
$38,170,000 for the fiscal year ended March 31, 2004.  Gross
profit as a percentage of sales for fiscal 2005 and 2004 was
40.3% and 40.6%, respectively.  The percentage decrease  can
be  attributed to increases in wholesale sales which  had  a
lower gross profit percentage.

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

  General and administrative expenses increased by $642,000,
or  6.0%, to $11,396,000 for the fiscal year ended March 31,
2005  from  $10,754,000 for the fiscal year ended March  31,
2004.   However,  general and administrative  expense  as  a
percentage of sales was 10.6% and 11.4% for the fiscal years
ended  March 31, 2005 and 2004, respectively.  The  increase
in  general  and administrative expenses for the year  ended
March  31,  2005  was  primarily due  to  the  following:  a
$336,000 increase in bank service and credit card fees which
can  be  directly  attributed to increased sales  in  fiscal
2005;  a  $259,000 increase to payroll expenses due  to  the
addition  of new employees in the customer care and pharmacy
departments  enabling the company to sustain its  growth;  a
$106,000   increase   to  property  expenses   relating   to
additional  rent due to our warehouse expansion;  a  $97,000
increase  in  insurance  expenses,  relating  to  additional
premiums paid for increases to insurance policy limits;  and
a  $70,000 increase in other expenses which includes  mainly
office  expenses.  Offsetting the increase were an  $113,000
reduction to telephone expenses, relating to one time  usage
credits  received in fiscal 2005, and an $113,000  reduction
to  professional  fees  primarily  from  a  one-time  NASDAQ
listing fee in fiscal 2004.

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

     Advertising   expenses   increased   by   approximately
$1,532,000,   or   approximately  8.7%,   to   approximately
$19,186,000  for the fiscal year ended March 31,  2005  from
approximately  $17,654,000 for the fiscal year  ended  March
31,  2004.   The  increase in advertising expenses  for  the
fiscal  year  ended March 31, 2005 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.


                                  16
<PAGE>


  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, 2005 was  $38,
compared to $31 for the same period the prior year.  We  can
attribute  this decrease in advertising efficiency  for  the
year ended March 31, 2005 compared to 2004 to the change  in
the advertising media mix caused by a shortage of television
advertising inventory, which was due to increased advertiser
demand  resulting  from the strengthening  economy  and  the
presidential   election.    The  decrease   in   advertising
efficiency may also be attributable to increased competition
from   both   veterinarians  and  traditional   and   online
retailers.   As  a percentage of sales, advertising  expense
was  17.7%  in fiscal 2005, as compared to 18.8%  in  fiscal
2004.  The percentage decrease can also be attributed to the
shortage   of  television  advertising  inventory  mentioned
above.   The Company expects advertising as a percentage  of
sales  to range from approximately 17.0% to 20.0% in  fiscal
2006.   However,  the advertising percentage will  fluctuate
quarter  to  quarter  due  to  seasonality  and  advertising
availability.

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

   Depreciation  and amortization increased by approximately
$24,000,  or 4.3%, to approximately $574,000 for the  fiscal
year  ended  March 31, 2005 from approximately $550,000  for
the  fiscal  year  ended March 31, 2004.   The  increase  to
depreciation and amortization expense for fiscal 2005 can be
attributed to property and equipment additions.

Interest income
---------------

   Interest  income increased by approximately  $89,000,  or
917%,  to  approximately $99,000 for the fiscal  year  ended
March  31,  2005 from approximately $10,000 for  the  fiscal
year  ended March 31, 2004.  The increase to interest income
can  be  attributed  to  increases  in  the  Company's  cash
balance,  which is swept into an interest bearing  overnight
account   and  tax-free  short  term  investment   accounts.
Interest income may decrease in future years as the  Company
utilizes its cash balances to increase inventory levels.

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

   For  the fiscal years ended March 31, 2005 and 2004,  the
Company  recorded an income tax provision for  approximately
$4,593,000  and $3,400,000, respectively, which resulted  in
an effective tax rate of 36.4% and 36.9%, respectively.

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

   Net  income  increased  by approximately  $2,196,000,  or
37.8%, to approximately $8,010,000 for the fiscal year ended
March  31, 2005 from approximately $5,814,000 for the fiscal
year  ended  March 31, 2004.  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.

Fiscal 2004 Compared to Fiscal 2003

Sales
-----

   Sales increased $39,019,000, or 71.0%, to $93,994,000 for
the year ended March 31, 2004, from $54,975,000 for the year
ended  March  31,  2003.   The  increase  in  sales  can  be
primarily  attributed to increased retail reorders  and  the
positive  effects  generated from our advertising  campaign.
Additionally,  the Company's free shipping promotion,  which
was initiated in March 2003, had a positive impact on sales.

   The  Company  has committed certain amounts  specifically
designated towards television and direct mail advertising to
stimulate  sales, create brand awareness,  and  acquire  new
customers.   Retail  new  order  sales  have  increased   by
approximately   $13,201,000,  or  45.7%,  to   approximately
$42,116,000 for the fiscal year ended March 31,  2004,  from
approximately  $28,915,000 for the fiscal year  ended  March
31,   2003.    Retail  reorder  sales  have   increased   by
approximately   $25,607,000,  or  99.1%,  to   approximately
$51,434,000 for the fiscal year ended March 31,  2004,  from
approximately  $25,827,000 for the fiscal year  ended  March
31,  2003.   Wholesale sales have increased by approximately
$211,000, or 91.5%, to approximately $444,000 for the fiscal
year  ended March 31, 2004, from approximately $233,000  for
the  fiscal year ended March 31, 2003.  The Company acquired
approximately 572,000 new customers for the year ended March
31,  2004,  compared to 414,000 new customers for  the  same
period in the prior year.

   The  majority  of our product sales are affected  by  the
seasons, due to the seasonality of mainly heartworm and flea
and   tick   medications.   Industry   seasonality   trends,
according    to   Fountain   Agricounsel   LLC,   Management
Consultants to Agribusiness, are divided into percentage  of
industry  sales by quarter.   For the quarters  ended  March
31,  June  30, September 30, and December 31 industry  sales
are  19%,  37%,  28%,  and 16%, respectively.   The  Company
cannot  accurately predict


                                  17
<PAGE>



future sales, however,  based  on  current   circumstances
the  Company  does   not  expect   a significant  variance
compared to the industry trends in   the first quarter  of
fiscal 2005.


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

   Cost  of  sales increased by $24,306,000,  or  77.1%,  to
$55,824,000 for the fiscal year ended March 31,  2004,  from
$31,518,000 for the fiscal year ended March 31,  2003.   The
increase  in  cost  of  sales is  directly  related  to  the
increase in retail sales in fiscal 2004 as compared to 2003.
As a percent of sales, the cost of sales was 59.4% in fiscal
2004,  as compared to 57.3% in fiscal 2003.  This percentage
increase  can  be directly attributed to the Company's  free
shipping  promotion, with a portion offset by  increases  in
our product pricing.

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

   Gross  profit  increased  by $14,713,000,  or  62.7%,  to
$38,170,000  for the fiscal year ended March 31,  2004  from
$23,457,000 for the fiscal year ended March 31, 2003.  Gross
profit as a percentage of sales for fiscal 2004 and 2003 was
40.6% and 42.7%, respectively.  This percentage decrease can
be  directly  attributed  to  the  Company's  free  shipping
promotion, with a portion offset by increases in our product
pricing.

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

    General   and   administrative  expense   increased   by
$2,797,000,  or  35.2%, to $10,754,000 for the  fiscal  year
ended  March  31, 2004 from $7,957,000 for the  fiscal  year
ended  March  31, 2003.  However, general and administrative
expense as a percentage of sales was 11.4% and 14.5% for the
fiscal  years  ended March 31, 2004 and 2003,  respectively.
The  increase in general and administrative expense for  the
year  ended  March  31,  2004  was  primarily  due  to   the
following:  a $1,265,000 increase to payroll expenses  which
can  be  attributed to the addition of new employees in  the
customer service and pharmacy departments, which enabled the
company to sustain its continued growth; a $792,000 increase
to  bank  service and credit card fees which can be directly
attributed  to  increased sales in fiscal 2004;  a  $357,000
increase to professional fees, of which $107,000 related  to
NASDAQ  listing  fees;  a  $151,000  increase  to  telephone
expenses which is directly attributed to increased sales  in
fiscal  2004;  a  $148,000 increase in  insurance  expenses,
which  related  to  additional  premium  paid  for  property
insurance  on  our  increased inventory  and  directors  and
officer  insurance; and a $84,000 increase in other expenses
which  includes  mainly property, and other  related  office
expenses.

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

     Advertising   expenses   increased   by   approximately
$6,004,000,   or   approximately  51.5%,  to   approximately
$17,654,000  for the fiscal year ended March 31,  2004  from
approximately  $11,650,000 for the fiscal year  ended  March
31,  2003.   The  increase in advertising  expense  for  the
fiscal  year  ended March 31, 2004 was due to the  Company's
plan  to  commit  certain  amounts  specifically  designated
towards  television and direct mail advertising to stimulate
sales,  create  brand awareness, and acquire new  customers.
As  a  percent  of sales, advertising expense was  18.8%  in
fiscal  2004,  as  compared to 21.2% in  fiscal  2003.   The
Company  expects advertising as a percent of sales to  range
approximately  from 18.0% to 22.0% in fiscal 2005.   However
that  advertising  percentage  will  fluctuate  quarter   to
quarter due to seasonality and advertising availability.

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

   Depreciation  and amortization increased by approximately
$182,000, or 49.7%, to approximately $550,000 for the fiscal
year  ended  March 31, 2004 from approximately $368,000  for
the  fiscal  year  ended March 31, 2003.   The  increase  to
depreciation and amortization expense for fiscal 2004 can be
attributed  to  increased property and  equipment  additions
mainly related to the Company's warehouse expansion.

Gain or loss on disposal of property and equipment
--------------------------------------------------

  In fiscal 2003, the Company recorded a gain on disposal of
computer   equipment  of  $15,000.   The  fully  depreciated
computer equipment was sold to an unrelated third party  and
the  Company received gross proceeds of $15,000.  There  was
no  related  gain  or  loss  on  disposal  of  property  and
equipment in fiscal 2004.

Interest expense
-----------------

   Interest  expense decreased by approximately $16,000,  or
52.6%,  to  approximately $15,000 for the fiscal year  ended
March  31,  2004 from approximately $31,000 for  the  fiscal
year  ended  March 31, 2003.  The $15,000  decrease  can  be
attributed  to  a  reduction  of  the  utilization  of   the
Company's  $5,000,000 line of credit.  Interest expense  may
increase  in  future quarters, due to the Company  utilizing
its $5,000,000 line of credit to increase inventory levels.


                                  18
<PAGE>


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

   The Company had incurred significant net losses since its
inception in 1996, through the quarter ended June 30,  2001.
These   losses   have   resulted  in  net   operating   loss
carryforwards, which have been used by the Company to offset
its  tax  liabilities.  For the fiscal year ended March  31,
2002,  the  Company  recorded  a  full  valuation  allowance
against  the  deferred  income tax assets,  created  by  net
operating  losses, since future utilization of these  assets
was  subject  to  the Company's ability to generate  taxable
income.   For  the  fiscal year ended March  31,  2003,  the
Company   recognized  a  deferred  income   tax   asset   of
approximately $581,000, due to the fact that the Company had
demonstrated  the ability to generate taxable  income.   The
use of future net operating loss carryforwards is limited to
approximately  $266,000 annually; due to  the  November  22,
2000  change of control.  There are no guarantees  that  the
Company  will  be able to utilize all future  net  operating
loss  carryforwards,  unless the Company  generates  taxable
income.  For the fiscal years ended March 31, 2004 and 2003,
the   Company   recorded  an  income   tax   provision   for
approximately  $3,400,000 and $223,000,  respectively.   The
effective  tax  rate for fiscal 2004 was 36.9%  compared  to
6.4%  for fiscal 2003.  This difference is primarily due  to
the  utilization of prior net operating losses, which offset
taxable  income for the period, and the recognition  of  the
deferred tax asset in fiscal 2003.  Upon recognition of  the
$581,000 deferred income tax asset, the Company reduced  its
income  tax  provision by the same amount.  This income  tax
provision  reduction was a tax benefit, which increased  net
income.

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

   Net  income  increased  by approximately  $2,556,000,  or
78.5%,  to  $5,814,000 net income for the fiscal year  ended
March  31,  2004 from $3,258,000 net income for  the  fiscal
year  ended  March 31, 2003.  The significant  increase  was
mainly  attributable  to  the  Company's  sales  growth  and
profitable operations.

Liquidity and Capital Resources


   The    Company's working   capital at March 31, 2005  and
2004  was  $21,969,000 and $11,338,000,  respectively.   The
$10,631,000  increase  in  working  capital  was   primarily
attributable to cash flow generated from operations and  the
exercise  of stock options and warrants.  Net cash  provided
by  operating  activities was $8,349,000 and $1,106,000  for
the  years ended March 31, 2005 and 2004, respectively.  Net
cash  used in investing activities was $172,000 and $742,000
for  the  years ended March 31, 2005 and 2004, respectively.
This  $570,000  decrease can be attributed to less  property
and  equipment acquisitions in fiscal 2005 than fiscal 2004.
Net cash provided by financing activities was $1,225,000 and
$1,931,000  for  the years ended March 31,  2005  and  2004.
This  $706,000 decrease can be attributed to a  decrease  in
the number of stock options and warrants being exercised  in
fiscal 2005 than fiscal 2004.

   Since its inception, the Company has primarily funded its
growth  through  the private placement of  securities.   The
Company  had  financed certain equipment  acquisitions  with
capital  leases.  As of March 31, 2005 and 2004 the  Company
had  no  outstanding lease commitments except for the  lease
for its executive offices and warehouse ("facility").

   On  July 25, 2003 the Company signed an amendment to  its
current lease agreement to obtain an additional 8,000 square
feet,  with an option to add another 3,600 square  feet,  to
its  current  32,000  square  foot  facility,  which  became
available  on  October  1,  2003.   This  addition  to   the
warehouse  was necessary to increase the Company's  capacity
to  store  additional inventory during our peak season.   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.   Under  the terms of the  new  amendment  the
Company will be leasing 43,000 square feet.

   The  Company's $5,000,000 line of credit with  SouthTrust
Bank, N.A. expired on August 28, 2004.  On November 2,  2004
the Company signed a new $6,000,000 line of credit agreement
with RBC Centura Bank.  The $6,000,000 line of credit, which
upon 30 days notice has a provision to increase the line  to
$7,500,000, is effective through November 2, 2005,  and  the
interest  rate  is  at  the  published  thirty  day   London
Interbank  Offered  Rates ("LIBOR") plus  1.50%  (4.35%  and
3.50%  at  March  31,  2005  and  2004,  respectively),  and
contains  various  financial and  operating  covenants.   At
March  31,  2005 and 2004, there was no balance  outstanding
under either line of credit agreement.

   On  March  12, 2002, the Company entered into a $205,000,
three  year  term loan agreement with a bank, with  interest
accruing  at  the lending institution's base rate  plus  1%.
The  loan proceeds were used to purchase a $250,000 computer
server.   The  aggregate loan maturities were  approximately
$68,000 per year for three years.  At March 31, 2005,  there
was no balance outstanding under the term loan agreement and
a $68,000 balance at March 31, 2004.


                                  19
<PAGE>



  Presently, the Company has approximately $300,000  planned
for capital expenditure commitments to further the Company's
growth during fiscal 2006, which will be funded through cash
from  operations.  The Company's sources of working  capital
include  the line of credit, cash from operations,  and  the
exercise  of  stock  options  and  warrants.   The   Company
presently  has  no  need  for other alternative  sources  of
working  capital  and at this time, have 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 that the Company
will sustain profitability or positive cash flow.

Recent Accounting Pronouncements

  In  December  2004,  the  Financial  Accounting  Standards
Board issued SFAS No. 123R, Share Based Payment, which is  a
revision  of  SFAS No. 123.  This Statement  supersedes  APB
No.  25, which is the basis for the Company's current policy
on  accounting for stock-based compensation.   SFAS No. 123R
will  require  companies to recognize as an expense  in  the
Statement  of  Income  the grant-date fair  value  of  stock
options  and  other  equity-based  compensation  issued   to
employees.  SFAS No. 123R is effective for the Company as of
April  1, 2006, the beginning of the first quarter in fiscal
2007.   Under  the  methods  of  adoption  allowed  by   the
standard,  awards  that are granted,  modified,  or  settled
after  the date of adoption should be measured and accounted
for  in  accordance with SFAS No. 123R.  The fair  value  of
unvested equity-classified awards that were granted prior to
the  effective date should continue to be accounted  for  in
accordance  with  SFAS  No.  123  except  that  compensation
amounts  must  be  recognized in the  Statement  of  Income.
Previously reported amounts may be restated (either  to  the
beginning  of  the  year  of adoption  or  for  all  periods
presented)  to  reflect the SFAS No.  123R  amounts  in  the
Statement of Income.  Pro-forma disclosures about  the  fair
value method and the impact on net income and net income per
common share appear in Notes 1 to the Consolidated Financial
Statements.   The Company is evaluating the requirements  of
SFAS No. 123R and expects that the adoption of SFAS No. 123R
will  have  a material impact on its consolidated statements
of income and earnings per share.

  The  Company  does  not believe that  any  other  recently
issued,  but  not  yet  effective, accounting  standard,  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, accounts receivable,  accounts
payable,  line  of credit, and debt obligations.   The  book
values   of  cash  equivalents,  accounts  receivable,   and
accounts payable are considered to be representative of fair
value  because  of the short maturity of these  instruments.
At March 31, 2005 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.
Our  exposure  to market risk for changes in interest  rates
relates  primarily  to our obligations  under  our  line  of
credit.   As  of  June  3, 2005, there  was  no  outstanding
balance  under the line of credit agreement.  A ten  percent
increase  in short-term interest rates on the variable  rate
debts  outstanding  as  of June 3, 2005  would  not  have  a
material impact on our annual interest expense, assuming the
amount of debt outstanding remains constant.

  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, 2005 and March 31, 2004     24

Consolidated Statements of Income for each of the three
years in the period ended March 31, 2005                                25

Consolidated Statements of Changes in Shareholders' Equity for
  each of the three years in the period ended March 31, 2005            26

Consolidated Statements of Cash Flows for each of the three
years in the period ended March 31, 2005                                27

Notes to Consolidated Financial Statements                              28















                                  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,  2005 and 2004, 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, 2005.  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, 2005 and  2004,  and  the
results of their operations and their cash flows for each of
the  three  years  in the period ended March  31,  2005,  in
conformity   with   U.S.   generally   accepted   accounting
principles.



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


April 30, 2005, except for the last paragraph of
note 11, as to which the date is May 18, 2005
New York, New York












                                  23
<PAGE>





                   PETMED EXPRESS, INC. AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                      March 31,
                                                               2005            2004
                                                          -------------  --------------
<S>                                                       <C>            <C>
                                   ASSETS
                                   ------

Current assets:
   Cash and cash equivalents                              $  12,680,962   $   3,278,926
   Accounts receivable, less allowance for doubtful
      accounts of $37,000 and $23,000, respectively           1,796,756       1,133,301
   Inventories - finished goods                              11,180,333      11,179,858
   Prepaid expenses and other current assets                    213,152         232,218
                                                          -------------  --------------
          Total current assets                               25,871,203      15,824,303

   Property and equipment, net                                1,286,267       1,688,327
   Deferred income taxes                                        582,846         581,356
   Intangible asset                                             365,000         365,000
   Other assets                                                  14,167          21,822
                                                          -------------  --------------

Total assets                                              $  28,119,483   $  18,480,808
                                                          =============   =============
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                       $   2,724,990   $   3,273,062
   Income taxes payable                                         601,535         422,445
   Accrued expenses and other current liabilities               575,894         722,350
   Current portion of loan obligation                                 -          68,442
                                                          -------------  --------------

Total liabilities                                             3,902,419       4,486,299
                                                          -------------  --------------
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; 23,458,725 and 21,860,057 shares
      issued and outstanding, respectively                       23,459          21,860
   Additional paid-in capital                                12,074,611       9,864,025

   Retained earnings                                         12,110,096       4,099,726
                                                          -------------  --------------

          Total shareholders' equity                         24,217,064      13,994,509
                                                          -------------  --------------

Total liabilities and shareholders' equity                $  28,119,483   $  18,480,808
                                                          =============  ==============
</TABLE>


 See accompanying notes to consolidated financial statements


                                  24
<PAGE>


                PETMED EXPRESS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                              Year Ended March 31,

                                                       2005           2004           2003
                                                 --------------  -------------  -------------
<S>                                              <C>             <C>            <C>
 Sales                                           $  108,357,747  $  93,994,233  $  54,974,916
 Cost of sales                                       64,700,002     55,824,406     31,517,639
                                                 --------------  -------------  -------------

 Gross profit                                        43,657,745     38,169,827     23,457,277
                                                 --------------  -------------  -------------
 Operating expenses:
      General and administrative                     11,396,320     10,754,427      7,956,786
      Advertising                                    19,185,982     17,653,614     11,649,811
      Depreciation and amortization                     573,817        550,392        367,673
                                                 --------------  -------------  -------------
 Total operating expenses                            31,156,119     28,958,433     19,974,270
                                                 --------------  -------------  -------------

 Income from operations                              12,501,626      9,211,394      3,483,007
                                                 --------------  -------------  -------------
 Other income (expense):
      Gain on disposal of property and equipment              -              -         15,000
      Interest expense                                     (965)       (14,546)       (30,658)
      Interest income                                    99,044          9,739          6,973
      Other, net                                          3,710          6,938          6,084
                                                 --------------  -------------  -------------

 Total other income (expense)                           101,789          2,131         (2,601)
                                                 --------------  -------------  -------------

 Income before provision for income taxes            12,603,415      9,213,525      3,480,406

 Provision for income taxes                           4,593,045      3,399,921        222,841
                                                 --------------  -------------  -------------

 Net income                                      $    8,010,370  $   5,813,604  $   3,257,565
                                                 ==============  =============  =============
 Net income per common share:
       Basic                                     $         0.35  $        0.30  $        0.19
                                                 ==============  =============  =============
       Diluted                                   $         0.34  $        0.25  $        0.16
                                                 ==============  =============  =============

 Weighted average number of common shares outstanding:

       Basic                                         22,862,417     19,471,681     17,300,130
                                                 ==============  =============  =============
       Diluted                                       23,833,189     23,689,866     20,749,515
                                                 ==============  =============  =============
</TABLE>

  See accompanying notes to consolidated financial statements


                                  25
<PAGE>






















                 PETMED EXPRESS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

 Fiscal years ended March 31, 2003, March 31, 2004 and March 31, 2005

<TABLE>
<CAPTION>

                                                                                                       Retained
                                     Convertible                      Common            Additional       Earnings
                                    Preferred Stock                   Stock             Paid-In       (Accumulated
                               --------------------------     ----------------------
                                Shares           Amounts       Shares       Amounts      Capital         Deficit)      Total
                               ---------------------------------------------------------------------------------------------------
<S>                            <C>            <C>            <C>           <C>         <C>            <C>            <C>

 Balance, March 31, 2002          2,500       $   8,898      16,360,010    $  16,360   $  6,528,885   $ (4,971,443)  $   1,582,700

    Issuance of common
      stock from exercise of
      stock options                   -               -       1,018,833        1,019        304,360              -         305,379
    Issuance of common
      stock from exercise of
      warrants                        -               -       1,082,035        1,082        274,375              -         275,457
    Tax benefit related to
      stock options exercised         -               -               -            -        171,587              -         171,587
    Net income                        -               -               -            -              -      3,257,565       3,257,565
                               ----------- ---------------- ------------- ------------ -------------- -------------- -------------

 Balance, March 31, 2003          2,500           8,898      18,460,878       18,461      7,279,207     (1,713,878)      5,592,688

    Issuance of common
      stock from exercise of
      stock options                   -               -       1,179,596        1,179      1,285,366              -       1,286,545
    Issuance of common
      stock from exercise of
      warrants                        -               -       2,219,583        2,220        710,580              -         712,800
    Tax benefit related to
      stock options exercised         -               -               -            -        588,872              -         588,872
    Net income                        -               -               -            -              -      5,813,604       5,813,604
                               ----------- ---------------- ------------- ------------ -------------- -------------- -------------

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

</TABLE>

  See accompanying notes to consolidated financial statements


                                  26
<PAGE>





              PETMED EXPRESS, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                      Year Ended March 31,
                                                                2005            2004             2003
                                                           -------------   -------------    -------------
<S>                                                        <C>             <C>              <C>
Cash flows from operating activities:
 Net income                                                $   8,010,370   $   5,813,604    $   3,257,565
 Adjustments to reconcile net income to net cash
  provided by operating activities:
     Depreciation and amortization                               573,817         550,392          367,673
     Tax benefit related to stock options exercised              918,749         588,872          171,587
     Gain on disposal of property and equipment                        -               -          (15,000)
     Deferred income taxes                                        (1,490)              -         (581,356)
     Bad debt expense                                             16,092           7,432           15,027
     (Increase) decrease in operating assets and liabilities:
       Accounts receivable                                      (679,547)       (488,850)        (375,397)
       Inventories                                                  (475)     (6,911,712)      (1,961,526)
       Prepaid expenses and other current assets                  19,066         245,890         (329,500)
       Other assets                                                7,655         178,333         (150,000)
       Accounts payable                                         (548,072)        702,603          696,535
       Income taxes payable                                      179,090         251,693          170,752
       Accrued expenses and other current liabilities           (146,456)        167,338         (296,059)
                                                           -------------   -------------    -------------
Net cash provided by operating activities                      8,348,799       1,105,595          970,301
                                                           -------------   -------------    -------------

Cash flows from investing activities:
 Purchases of property and equipment                            (171,757)       (741,740)        (744,596)
 Purchases of intangible asset                                         -               -         (365,000)
 Net proceeds from the sale of property and equipment                  -               -           15,000
                                                           -------------   -------------    -------------
Net cash used in investing activities                           (171,757)       (741,740)      (1,094,596)
                                                           -------------   -------------    -------------
Cash flows from financing activities:
 Proceeds from the exercise of stock options and warrants
    and other transactions                                     1,293,436       1,999,345          580,836
 Payments on the line of credit                                        -               -         (141,214)
 Payments on the loan obligation                                 (68,442)        (68,443)         (68,442)
                                                           -------------   -------------    -------------
Net cash provided by financing activities                      1,224,994       1,930,902          371,180
                                                           -------------   -------------    -------------

Net increase in cash and cash equivalents                      9,402,036       2,294,757          246,885
Cash and cash equivalents, at beginning of period              3,278,926         984,169          737,284
                                                           -------------   -------------    -------------

Cash and cash equivalents, at end of period                $  12,680,962   $   3,278,926    $     984,169
                                                           =============   =============    =============
Supplemental disclosure of cash flow information:

 Cash paid for interest                                    $         884    $     14,302    $      30,675
                                                           =============   =============    =============
 Cash paid for income taxes                                $   3,496,696    $  2,513,214    $     508,000
                                                           =============   =============    =============
</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  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  2005,  2004, or 2003 refer to the Company's fiscal  years
     ended March 31, 2005, 2004 and 2003, 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 and handling 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 one 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  customers'  inability  to  make  required  payments,
     arising from either credit card charge-backs or insufficient fund
     checks.    The   Company   determines  its   estimates   of   the
     uncollectibility  of accounts receivable by analyzing  historical
     bad  debts  and current economic trends.  At March 31,  2005  and
     2004  the  allowance  for  doubtful  accounts  was  approximately
     $37,000 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, 2005 and 2004, consist  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.

     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.


                                  28
<PAGE>




                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies (Continued)

     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
     $228,000 at both March 31, 2005 and 2004.

     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,
     which  the Company obtained in September 2002.  The Company  paid
     $365,000,  to  reimburse  previously expended  advertising  costs
     relating  to  obtaining the rights to the toll-free  number.   In
     accordance  with the Statement of Financial Accounting  Standards
     ("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  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.







                                  29
<PAGE>







                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies (Continued)

     Accounting for Stock-Based Compensation

     The  Company  accounts  for  employee  stock  options  using  the
     intrinsic  value  method as prescribed by  Accounting  Principles
     Board  Opinion  ("APB") No. 25, Accounting for  Stock  Issued  to
     Employees.  The Company follows the disclosure provisions of SFAS
     No.  123,  Accounting for Stock-Based Compensation, for  employee
     stock  options.  Had the Company determined employee compensation
     cost  based  on  the fair value at the grant date for  its  stock
     options  under SFAS No. 123, the Company's net income would  have
     been decreased to the pro forma amounts indicated below:


<TABLE>
<CAPTION>

        Year Ended March 31,                           2005           2004          2003
        --------------------                        -----------   -----------   -----------
        <S>                                         <C>           <C>           <C>

        Reported net income:                        $ 8,010,370   $ 5,813,604   $ 3,257,565

        Deduct: total stock-based employee
        compensation expense determined under
        fair-value based method for all awards,
        net of related tax effects                      501,244       289,907       285,258
                                                    -----------   -----------   -----------
        Pro forma net income:                       $ 7,509,126   $ 5,523,697   $ 2,972,307
                                                    ===========   ===========   ===========
        Reported basic net income per share:        $      0.35   $      0.30   $      0.19
                                                    ===========   ===========   ===========
        Pro forma basic net income per share:       $      0.33   $      0.28   $      0.17
                                                    ===========   ===========   ===========
        Reported diluted net income per share:      $      0.34   $      0.25   $      0.16
                                                    ===========   ===========   ===========
        Pro forma diluted net income per share:     $      0.32   $      0.23   $      0.14
                                                    ===========   ===========   ===========
     </TABLE>

     The  per  share  weighted-average fair  value  of  stock  options
     granted during fiscal 2005, 2004, and 2003 was $5.45,  $4.13, and
     $1.28, 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 86 percent, 68 percent,
     and 62 percent, respectively.

     Fair Value of Financial Instruments

     The  carrying amounts of the Company's cash and cash equivalents,
     accounts  receivable and accounts payable approximate fair  value
     due  to  the short-term nature of these instruments. The carrying
     amount  of  the  loan payable approximates fair  value  as  their
     interest rates approximate current market rates.

     Comprehensive Income

     The  Company  has  adopted 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.

     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.

                                  30
<PAGE>




                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Summary of Significant Accounting Policies (Continued)

     Recent Accounting Pronouncements

     In December 2004, the Financial Accounting Standards Board issued
     SFAS  No. 123R, Share Based Payment, which is a revision of  SFAS
     No.  123.   This Statement supersedes APB No. 25,  which  is  the
     basis  for the Company's current policy on accounting for  stock-
     based  compensation.    SFAS No. 123R will require  companies  to
     recognize as an expense in the Statement of Income the grant-date
     fair  value  of stock options and other equity-based compensation
     issued  to employees.  SFAS No. 123R is effective for the Company
     as of April 1, 2006, the beginning of the first quarter in fiscal
     2007.   Under  the methods of adoption allowed by  the  standard,
     awards  that are granted, modified, or settled after the date  of
     adoption should be measured and accounted for in accordance  with
     SFAS  No.  123R.   The  fair value of unvested  equity-classified
     awards  that  were  granted prior to the  effective  date  should
     continue  to  be accounted for in accordance with  SFAS  No.  123
     except  that  compensation  amounts must  be  recognized  in  the
     Statement of Income.  Previously reported amounts may be restated
     (either  to  the  beginning of the year of adoption  or  for  all
     periods  presented) to reflect the SFAS No. 123R amounts  in  the
     Statement of Income.  Pro forma disclosures about the fair  value
     method  and  the impact on net income and net income  per  common
     share  appear in the above table.  The Company is evaluating  the
     requirements  of SFAS No. 123R and expects that the  adoption  of
     SFAS  No.  123R  will have a material impact on its  consolidated
     statements of income and earnings per share.

     The  Company does not believe that any other recently issued, but
     not  yet  effective,  accounting standard, if currently  adopted,
     will  have  a  material  effect  on  the  Company's  consolidated
     financial position, results of operations or cash flows.

 (2) Property and Equipment

     Major  classifications of property and equipment consist  of  the
following:

<TABLE>
<CAPTION>

                                                                March 31,
                                                        2005              2004
                                                    ------------     -------------
                                                    $                $
    <S>                                             <C>              <C>
    Leasehold improvements                               384,445           379,259
    Computer software                                    391,197           390,787
    Furniture, fixtures and equipment                  2,361,438         2,195,277
    Equipment and software under capital lease           113,398           113,398
                                                    ------------     -------------
                                                       3,250,478         3,078,721
    Less: accumulated depreciation and amortization   (1,964,211)       (1,390,394)
                                                    ------------     -------------

           Property and equipment, net              $  1,286,267     $   1,688,327
                                                    ============     =============
</TABLE>


     Amortization  expense  for equipment and software  under  capital
     leases  was approximately $10,000, $35,000, and $24,000, for  the
     years ended March 31, 2005, 2004, and 2003, respectively.











                                  31
<PAGE>






                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3)  Accrued Expenses

     Major   classifications  of  accrued  expenses  consist  of   the
following:

<TABLE>
<CAPTION>

                                           March 31,
                                       2005         2004
                                     ----------   ----------
    <S>                              <C>          <C>

    Accrued salaries                 $   84,706   $  290,722
    Accrued legal expenses               78,000       88,000
    Accrued advertising expenses        177,000       72,000
    Other accrued liabilities           236,188      271,628
                                     ----------   ----------

           Accrued expenses          $  575,894   $  722,350
                                     ==========   ==========
</TABLE>



(4)  Line of Credit Agreement and Loan Obligation

     The  Company's  $5,000,000 line of credit with  SouthTrust  Bank,
     N.A. expired on August 28, 2004.  On November 2, 2004 the Company
     signed a new $6,000,000 line of credit agreement with RBC Centura
     Bank.   The $6,000,000 line of credit, which upon 30 days  notice
     has  a provision to increase the line to $7,500,000, is effective
     through  November  2,  2005, and the  interest  rate  is  at  the
     published  thirty  day London Interbank Offered  Rates  ("LIBOR")
     plus  1.50%  (4.35%  at  March 31, 2005),  and  contains  various
     financial  and operating covenants.  At March 31, 2005 and  2004,
     there  was  no  balance outstanding under either line  of  credit
     agreement.

     On March 12, 2002, the Company entered into a $205,000 three-year
     term  loan agreement with a bank, with interest accruing  at  the
     lending institution's base rate plus 1%.  The loan proceeds  were
     used  to purchase a $250,000 computer server.  The aggregate loan
     maturities were approximately $68,000 per year for three years.

     The  line  of  credit  is  secured by substantially  all  of  the
     Company's assets.

(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,  2005  and  2004,  2,500 shares of the convertible  preferred
     stock remained unconverted and outstanding.





                                  32
<PAGE>





                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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:

<TABLE>
<CAPTION>
                                                           March 31,
                                                     2005           2004
                                                 ------------   ------------
     <S>                                         <C>            <C>

     Deferred tax assets:
        Bad debt and inventory reserves          $     97,941   $     94,507
        Accrued expenses                              132,095        141,246
        Net operating loss carryforward             1,218,715      1,339,699
                                                 ------------   ------------

     Deferred tax assets                            1,448,751      1,575,452
     Less: valuation allowance                       (717,549)      (803,902)
                                                 ------------   ------------

     Total deferred tax assets                        731,202        771,550

     Deferred tax liabilities:
        Depreciation                                 (148,356)      (190,194)
                                                 ------------   ------------

     Total net deferred taxes                    $    582,846   $    581,356
                                                 ============   ============
      </TABLE>

     The  change in the valuation allowance for the years ended  March
     31,  2005  and  2004  was  approximately  $86,000  and  $135,000,
     respectively.   At March 31, 2005, the Company had net  operating
     loss   carryforwards  of  approximately  $3,294,000.    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 the  November
     22, 2000 change of control.

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

<TABLE>
<CAPTION>
                                                Year Ended March 31,
                                                2005           2004
                                            ------------   ------------
       <S>                                  <C>            <C>

       Current taxes
            Federal                         $  3,911,564   $  2,902,988
            State                                682,971        496,933
                                            ------------   ------------
       Total current taxes                     4,594,535      3,399,921
                                            ------------   ------------
       Deferred taxes
            Federal                               (1,490)             -
            State                                      -              -
                                            ------------   ------------
       Total deferred taxes                       (1,490)             -
                                            ------------   ------------

       Total provision for income taxes     $  4,593,045   $  3,399,921
                                            ============   ============

</TABLE>


                                  33
<PAGE>






                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6)  Income Taxes (Continued)

     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,
                                                             2005         2004           2003
                                                         ------------  ------------  ------------
      <S>                                                <C>           <C>           <C>

      Income taxes at U.S. statutory rates               $  4,285,161  $  3,132,599  $  1,183,338
      State income taxes, net of federal tax benefit          457,504       334,451       126,339
      Permanent differences                                     9,178           992         1,512
      Other                                                   (72,445)       66,743       177,763
      Change in valuation allowance                           (86,353)     (134,864)   (1,266,111)
                                                         ------------  ------------  ------------
      Total provision for income taxes                   $  4,593,045  $  3,399,921  $    222,841
                                                         ============  ============  ============

</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 1,166,002 and 2,019,337 options outstanding under the
     Plan  at  March 31, 2005 and 2004, respectively.  Options  issued
     prior to July 31, 1998 are not included in the Plan.

     A  summary  of  the status of stock options and certain  warrants
     issued  by the Company, together with changes during the  periods
     indicated, is presented in the following table:

<TABLE>
<CAPTION>

                                                                Weighted-
                                                                 average
                                                  Options     exercise price
                                                ------------  --------------
        <S>                                     <C>           <C>

        Balance at March 31, 2002                  4,237,100    $      0.98
           Options Granted                           910,432           0.75
           Options and Warrants Exercised         (1,800,868)          0.36
           Options Canceled                         (603,064)          1.45
                                                ------------  --------------
        Balance at March 31, 2003                  2,743,600           1.06
           Options Granted                           455,500           7.94
           Options Exercised                      (1,179,596)          1.09
           Options Canceled                             (167)          4.50
                                                ------------  --------------
        Balance at March 31, 2004                  2,019,337           2.60
           Options Granted                           230,500           8.18
           Options Exercised                      (1,058,668)          1.02
           Options Canceled                          (25,167)          4.66
                                                ------------  --------------

        Balance at March 31, 2005                  1,166,002    $      5.10
                                                ============  ==============
</TABLE>


                                  34
<PAGE>



                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7)  Stock Options and Warrants (Continued)

     The  following table summarizes information for options currently
     outstanding and exercisable at March 31, 2005:

<TABLE>
<CAPTION>

                               Options Outstanding      Options Exercisable
                     ------------------------------  ----------------------
                              Weighted-   Weighted-            Weighted-
                              average     average              average
       Exercise               Remaining   Exercise             Exercise
     Price Range     Number     Life       Price     Number     Price
   ---------------  ------------------------------  -------------------
   <S>              <C>        <C>        <C>        <C>       <C>
   $ 0.35 - $ 0.86    117,501  4.20 years $  0.64    117,501   $   0.64
     1.05 -   1.90    400,000  4.10 years    1.30    290,000       1.31
     3.45 -   6.50    163,001  4.24 years    3.92     37,667       3.45
     8.00 -  10.64    485,500  4.16 years    9.69    101,666      10.16
   ---------------  ------------------------------  -------------------
   $ 0.35 - $10.64  1,166,002  4.11 years $   5.10   546,834   $   2.96
   ===============  ==============================  ===================
</TABLE>

     At March 31, 2005 and 2004, the number of options exercisable was
     546,834  and  1,223,834, respectively, and  the  weighted-average
     exercise   price   of  those  options  was   $2.96   and   $0.97,
     respectively.   Adjustments are made for options forfeited  prior
     to vesting.

     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 expire on November  22,  2005,
     and  were  assigned a value of $601,260 using the  Black  Scholes
     option-pricing  model, as prescribed by SFAS No.  123,  with  the
     following   weighted-average  assumptions:  dividend  yield   0.0
     percent; risk-free interest rates of 6.00 percent; expected lives
     of  3-5  years, and expected volatility of 91 percent.  At  March
     31,  2005  all  of the 3,000,000 warrants issued on November  22,
     2000 were exercised.

     In  July  2003,  J.W.  Genesis exercised 59,583  warrants  via  a
     cashless exercise, forfeiting 15,417 shares.  The Company did not
     receive proceeds upon exercise of these warrants.

(8)  Related Party Transactions

     Guven Kivilcim, a former member of Tricon and a former member  of
     the  Company's Board of Directors, has an interest in Intelligent
     Switching  &  Software  LLC, and Numind Software  Systems,  Inc.,
     which the Company conducted business with during the fiscal  year
     ended  March  31,  2003.  Intelligent Switching  &  Software  LLC
     provided   the   Company  with  long  distance  telecommunication
     services, and Numind Software Systems, Inc. provided the  Company
     with  Internet  and  website design and  hosting  services.   The
     Company  paid  $154,000 to Intelligent Switching & Software  LLC,
     and $45,000 to Numind Software Systems, Inc., for services during
     the fiscal year ended March 31, 2003.






                                  35
<PAGE>





                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(9)  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 share includes the dilutive effect of  potential
     stock  issuances,  calculated using the  treasury  stock  method.
     Outstanding  stock  options, warrants, 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,
                                                      2005            2004            2003
                                                 -------------   -------------   -------------
     <S>                                         <C>             <C>             <C>
     Net income (numerator):

       Net income                                $   8,010,370   $   5,813,604   $   3,257,565
                                                 =============   =============   =============

     Shares (denominator)

       Weighted average number of common shares
         outstanding used in basic computation      22,862,417      19,471,681      17,300,130
       Common shares issuable upon exercise
         of stock options and warrants                 960,647       4,208,060       3,439,260
       Common shares issuable upon conversion
         of preferred shares                            10,125          10,125          10,125
                                                 -------------   -------------   -------------
       Shares used in diluted computation           23,833,189      23,689,866      20,749,515
                                                 =============   =============   =============
     Net income per common share:

       Basic                                     $        0.35   $        0.30   $        0.19
                                                 =============   =============   =============
       Diluted                                   $        0.34   $        0.25   $        0.16
                                                 =============   =============   =============
</TABLE>

     At  March  31, 2005, 2004 and 2003, 485,500, 305,000 and  124,600
     shares, respectively, of common stock options and warrants,  with
     a  weighted  average exercise price of $9.69, $10.16  and  $2.43,
     respectively, 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.

(10) Valuation and Qualifying Accounts

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

<TABLE>
<CAPTION>
                                                                  Year Ended March 31,
                                                            2005          2004          2003
                                                         -----------   -----------   -----------
    <S>                                                  <C>           <C>           <C>
    Allowance for doubtful accounts:
       Balance at beginning of period                    $    22,987   $    16,644   $     7,475
       Provision for doubtful accounts                        16,092         7,702        14,759
       Write-off of uncollectible accounts receivable         (2,544)       (1,359)       (5,590)
                                                         -----------   -----------   -----------
       Balance at end of period                          $    36,535   $    22,987   $    16,644
                                                         ===========   ===========   ===========
    Valuation allowance for deferred tax assets:
       Balance at beginning of period                    $   803,902   $   938,766   $ 2,204,877
       (Deletions) / additions                               (86,353)     (134,864)   (1,266,111)
                                                         -----------   -----------   -----------

       Balance at end of period                          $   717,549   $   803,902   $   938,766
                                                         ===========   ===========   ===========
</TABLE>


                                  36
<PAGE>


                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(11) Commitments and Contingencies

     Legal Matters

     The Company is a defendant in a lawsuit, filed in August 2002, in
     Texas state district court seeking injunctive and monetary relief
     styled  Texas  State  Board  of  Pharmacy  and  State  Board   of
     Veterinary Medical Examiners v. PetMed Express, Inc. Cause No.GN-
     202514,  in  the  201st Judicial District Court,  Travis  County,
     Texas.    The   Company  in  its  initial  pleading  denied   the
     allegations  contained  therein.   The  Company  will  vigorously
     defend,  is confident of its compliance with the applicable  law,
     and finds wrong-on-the-facts the vast majority of the allegations
     contained in the Plaintiffs' supporting documentation attached to
     the lawsuit.  Discovery commenced shortly after the filing of the
     lawsuit,  and at this stage of the litigation it is difficult  to
     assess any possible outcome or estimate any potential loss in the
     event of an adverse outcome.

     From August 17, 2004 until October 12, 2004 six shareholder class
     action  lawsuits were filed in the United States  District  Court
     for the Southern District of Florida against PetMed Express, Inc.
     and  certain of the Company's officers and directors for  alleged
     violations  of  the  federal securities laws.   These  complaints
     alleged  violations  of  the anti-fraud  provision  contained  in
     Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-
     5,  thereunder and asserted violations of Section 20(a)  of  that
     act  against  the  individual defendants as controlling  persons.
     The  actions  purported to be brought on behalf of purchasers  of
     the  Company's common stock between June 18, 2003  and  July  26,
     2004,  and  the complaints generally alleged that the  defendants
     made  false  or  misleading statements concerning  the  Company's
     business, prospects, and operations and failed to disclose, among
     other  things, (1) that the Company's business allegedly  depends
     on veterinarians, who are the Company's competitors, to authorize
     prescriptions, (2) that the Company's business model,  which,  in
     part,  requires veterinarians to authorize prescriptions,  caused
     veterinarians  to  incur certain costs and  burdens,  which  were
     supposedly shifted from the Company to the veterinarians, (3) the
     existence  of  a  supposed increase in veterinarian  refusals  to
     comply with Company requests for prescription authorization,  (4)
     the  Company's alleged inability to guarantee the quality of, and
     maintain  control over, pet medications and the  negative  impact
     this   was   having  on  veterinarian  willingness  to  authorize
     prescriptions,  and  (5)  that  the  foregoing  allegations  were
     adversely  impacting  the Company.  The complaints  also  alleged
     that  the individual defendants were motivated to engage  in  the
     alleged  violations  so  that they could affect  sales  of  their
     shares  of  the  Company's common stock at artificially  inflated
     prices.  The plaintiffs sought unspecified monetary damages.

     On  February  1, 2005, the six shareholder class action  lawsuits
     against  PetMed  Express,  Inc.  and  certain  of  the  Company's
     officers  and  directors  were  voluntarily  dismissed   by   the
     plaintiffs without prejudice.

     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.

     Employment Agreements

     On  March  16,  2001,  the  Company entered  into  an  employment
     agreement  with  its  Chief Executive Officer  ("CEO"),  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
     employment agreement.  The amendments are as follows: the term of
     the  agreement will be for three years, commencing on  March  16,
     2004;  Mr. Akdag's salary will be increased to $250,000 per  year
     throughout  the  term of the agreement, and Mr.  Akdag  shall  be
     granted 250,000 incentive stock options under the Company's  1998
     Stock Option Plan at an exercise price of $10.64 per share, which
     vest at the rate of 83,333 options on each of March 16, 2005  and
     2006, and 83,334 options on March 16, 2007.


                                  37
<PAGE>


                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(11) Commitments and Contingencies (Continued)

     On  May  1,  2000, the Company entered into a two-year employment
     agreement  with  Marc  Puleo,  M.D.,  current  President,   which
     provided  for  annual cash compensation to him of  $150,000.   On
     November 8, 2000, Dr. Puleo's employment agreement dated  May  1,
     2000  was amended to reflect a salary of $75,000 annually.  Under
     the  terms  of  the  employment agreement Dr. Puleo  received  an
     annual  salary  of $75,000, subject to increase no less  frequent
     than  an annual review by the Company's Board of Directors.   Dr.
     Puleo's salary was increased to $100,000 in fiscal year 2002, and
     then  increased  to $150,000 in May 2003.  The agreement  can  be
     terminated upon the mutual consent of the parties or upon 90 days
     notice  by the Company, in which case the Company would  continue
     to compensate him under the terms of his employment agreement, or
     his contract will renew annually.

     Operating Lease

     The  Company is responsible for certain maintenance costs,  taxes
     and  insurance  under  this lease.  Starting  June  1,  2005  the
     Company  will exercise their option to lease an additional  3,000
     square feet, which will increase the future minimum annual  lease
     payments.  On May 18, 2005 the Company extended for an additional
     three  years, its lease agreement which was due to expire on  May
     31,  2006.   The new amendment will expire on May 31, 2009.   The
     future minimum annual lease payments are as follows:

              Years Ending March 31,
              ----------------------

              2006                    $     429,000
              2007                          452,000
              2008                          470,000
              2009                          489,000
              2010                           82,000
                                      -------------

              Total lease payments    $   1,922,000
                                      =============


     Rent  expense was $383,000, $330,000 and $253,000 for  the  years
     ended March 31, 2005, 2004 and 2003, respectively.

(12) 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,
                                               2005    2004    2003
                                              ------  ------  ------
     Prescription medications                   30%     30%     29%
     Non-prescription medications               69%     69%     64%
     Shipping and handling charges and other     1%      1%      7%
                                              ------  ------  ------
     Total                                     100%    100%    100%
                                              ======  ======  ======





                                  38
<PAGE>




                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(13) Quarterly Financial Data (Unaudited)

     Summarized unaudited quarterly financial data for fiscal 2005 and
2004 is as follows:

<TABLE>
<CAPTION>


Quarter Ended:                 June 30, 2004  September 30, 2004  December 31, 2004  March 31, 2005
--------------                 --------------------------------------------------------------------
<S>                            <C>              <C>                <C>               <C>

Sales                          $  35,288,528    $  28,754,697      $  20,782,837     $  23,531,685
Income from operations         $   2,726,016    $   2,856,588      $   3,129,631     $   3,789,391
Net income                     $   1,818,138    $   1,811,655      $   1,957,111     $   2,423,466
Diluted net income per share   $        0.08    $        0.08      $        0.08     $        0.10

Quarter Ended:                 June 30, 2003  September 30, 2003 December 31, 2003   March 31, 2004
--------------                 --------------------------------------------------------------------
Sales                          $  30,387,563    $  24,969,228      $  17,169,571     $  21,467,871
Income from operations         $   2,147,288    $   2,929,004      $   1,976,108     $   2,158,994
Net income                     $   1,432,584    $   1,818,188      $   1,223,924     $   1,338,908
Diluted net income per share   $        0.06    $        0.08      $        0.05     $        0.06

</TABLE>











                                  39
<PAGE>





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

  Not applicable.

ITEM 9A. 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,  2005,  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.
There  have been no significant changes made in our internal  controls
or  in  other  factors  that could significantly affect  our  internal
controls  over financial reporting during the period covered  by  this
report.

ITEM 9B. OTHER INFORMATION

  Not applicable.









                                  40
<PAGE>





                                 PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

  The information required by this item will be set forth in our Proxy
Statement  relating to our 2005 Annual Meeting of Stockholders  to  be
held on August 5, 2005, 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 2005 Annual Meeting of Stockholders  to  be
held on August 5, 2005, 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 below in this Annual Report  on
Form  10-K) will be set forth in our Proxy Statement relating  to  our
2005 Annual Meeting of Stockholders to be held on August 5, 2005,  and
is incorporated herein by reference.

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  and  any
compensation  plans not previously approved by our Board of  Directors
as of March 31, 2005:

<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
 -------------------------------------------------------------------------------------------------------
                                       (a)                          (b)                      (c)
 <S>                                   <C>                         <C>                    <C>

 1998 Stock Option Plan                1,146,002                   $5.16                  3,853,998

 Equity compensation plans not
   approved by security holders (1)       20,000                   $1.33                          -
                                       ---------                                          ---------

 Total                                 1,166,002                                          3,853,998
                                       =========                                          =========

</TABLE>


  (1)  Represents non-plan options to purchase an aggregate of 20,000 shares
       of our common stock issued to a member of our management.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  The information required by this item will be set forth in our Proxy
Statement  relating to our 2005 Annual Meeting of Stockholders  to  be
held on August 5, 2005, 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 2005 Annual Meeting of Stockholders  to  be
held on August 5, 2005, and is incorporated herein by reference.


                                  41
<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 (*Management contract or compensatory  plan
         or arrangement.)

  10.1   Second  Amended and Restated Employment Agreement  with
         Marc  A.  Puleo (incorporated by reference to Exhibit  10.1  of
         the  Registrant's Annual Report on Form 10-KSB for  the  fiscal
         year ended March 31, 2000, Commission File No. 000-28827).*

  10.2   1998 Stock Option Plan (1)*

  10.3   Line of Credit Agreement with SouthTrust Bank, N.A. (1)

  10.4   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).*

  10.5   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).

  10.6   Line of Credit Renewal Agreement with SouthTrust Bank, N.A. (1).

  10.7   Loan Agreement with SouthTrust Bank, N.A. (1).

  10.8   Second Line of Credit ($1,000,000) Agreement with SouthTrust Bank,
         N.A. (1).

  10.9   Third Line of Credit ($2,000,000) Agreement with SouthTrust Bank,
         N.A. (1).

  10.10  Amendment to Third Line of Credit ($5,000,000) Agreement with
         SouthTrust Bank, N.A. (incorporated by reference to Exhibit 10.10
         of the Registrant's Form 10-Q on November 7, 2003, Commission
         File No. 000-28827).

  10.11  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).*

  10.12  Line of Credit ($6,000,000) Agreement with RBC Centura Bank.
         (incorporated by reference to Exhibit 10.12 of the Registrant's
         Form 10-Q on November 5, 2005, Commission File No. 000-28827).

  (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).



                                  42
<PAGE>



  (21)   Subsidiaries of Registrant

  21.1   Subsidiaries of Registrant (filed herewith).

  (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, 2005, 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, 2005, 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, 2005, 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.








                                  43
<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 3, 2005

                             PETMED EXPRESS, INC.
                             (the "Registrant")

                             By:  /s/ Menderes Akdag
                                -------------------------
                                Menderes Akdag
                                Chief Executive Officer
                                (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 3, 2005.

     SIGNATURE                  TITLE


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

/s/ Marc Puleo, M.D.          Chairman of the Board and President
--------------------
Marc Puleo, M.D.              Officer and Director

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

/s/ Robert C. Schweitzer
------------------------      Director
Robert C. Schweitzer

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

/s/ Gian Fulgoni              Director
----------------------
Gian Fulgoni

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






                                  44
<PAGE>